Oil Optimization Inc.(CVE:OOI) (PINK:OZTCF) gapped up significantly over the past trading session, but the stock has no fundamental reason to stay high.
OOI gapped up and ended the session with a 33.3% gain on Wednesday. The move generated the heaviest trading volume of the past year. Nearly 6.2 million shares changed hands, which is far away from the ordinary 218 thousand shares traded per day.
The stock price was dwelling around 4 cents for the past two months and this is the first serious attempt to bounce that bottom. If it somehow holds the momentum, a precedent for further rally might be created.
The problem is that there was no news or significant events that could be related to this price jump. The intraday price movements were choppy, and most orders were executed without causing a change in pricing. This situation allows to assume that there isn’t enough interest from traders to create the liquidity necessary for further price gains.
Looking at the last reported financials, it can be seen that the company’s current market cap is already 3.3 times larger than their book value. The stock is overpriced compared to its peers. The company has no revenues and is in exploration stage. Such stocks usually can’t trade at a P/B of more than 2 unless the recent news would have provided a precedent.
