Ziyang Ceramics Corporation (fka ZYCI)

[barattadog]

Interesting read from Bullworthy:

http://zyci.bullworthy.com/2012/06/20/ziyang-volume-price-surge/

Ziyang Ceramics Corp. (OTC.BB: ZYCI) Volume and Price Surge Intraday

Ziyang has so far experienced a 32-fold increase in trading volume today when compared to its recent activity as it gained 40% in price. The trading activity was bullish with the stock consistently higher through midday.

The technicals of today’s trading in ZYCI

It is difficult to assess this stock on a technical basis because of the low trading volume. Indicators like RSI reached an overbought level on the big price move but that seems to be irrelevant for the most part.

Price moves are subject to frequent gaps and that creates a number of spikes up and down in traditional indicators. That means more subtle analytic techniques are needed, such as watching whether the stock is trading closer to the bid or ask price. Traders buying the stock will generally be trading at the ask price and sellers will most often accept the bid.

In the case of Ziyang today, most of the trading activity occurred closer to the asking price, which is associated with buying activity.

When volume rises and price rises, especially at a time when the major market averages are basically directionless, that is a bullish sign. In fact, Ziyang moved against the major market trend on a day when only one of three Bulletin Board stocks moved up.

These are technical factors that matter in any stock. Ziyang is one of the strongest stocks in a generally declining market and that is important to assessing its probable future trend. For now, the trend appears to be higher, especially as more investors come to understand the company’s business prospects and fundamental valuation.

We continue to believe that Ziyang is undervalued and further believe that the pickup in trading activity is consistent with other investors realizing that. The reason that this bargain-priced stock is trading so low is likely because investors are unaware of the stock’s potential.

Another reason for the undervaluation may have been that Ziyang was unfairly lumped together with Chinese stocks that have accounting problems. This company is different in that it delivers audited financial statements, has solid cash flow from operations and its book value is derived from tangible assets rather than estimates of the value of intellectual property rights or based on other uncertain factors.

Ziyang is a step closer to our price target and we believe the progress will continue.