American Community Development Group, Inc. (OTCMKTS:ACYD) Moving Up Despite Lack of News

The merger between American Community Development Group, Inc. (OTCMKTS:ACYD) and Wialand Technologies, Inc. was completed forty-three days ago and when you compare the share price back then to at yesterday’s close, you’ll see that the ticker’s value has appreciated by more than 3,700%. That’s an astonishing performance, but what caused it?

Well, the acquisition of Wialan has certainly been a welcome relief for ACYD‘s shareholders. The company was really struggling with its previous business and, predictably, the price was taking a beating. When the former CEO, Mr. John Folger introduced the shareholders to Wialan, he said that the new company has a really cool piece of technology, an established stream of revenues and some astonishingly clever people at the helm. Although Mr. Folger himself was about to resign from his position, he seemed genuinely excited about the future of ACYD. At first, however, investors weren’t sharing his enthusiasm all that much.

Trading volumes during the first days after the merger were higher but the price movement was tectonically slow. Although everyone seemed optimistic about the new technology and the financial stability that Wialan is supposed to bring, it took the ticker almost a month to breach the $0.01 per share barrier. The ascend was aided by a couple of press releases and a conference call with the new management team who seem quite eager to explain to the whole world how great the company is now.

Once the PR action subsided, however, the interest in the ticker began to die down. Trading volumes throughout the first days of October were generally lower and although the ticker managed to remain above the $0.01 per share mark, it didn’t seem to be in a hurry to go higher up the charts.

This week, however, it has been on fire. On Monday, it put on around 10% finishing the day at $0.0155. Tuesday was also positive when the price reached $0.0188 and on Wednesday it made an absolutely rally gaining as much as 88% after just six and a half hours of trading, closing the session at around $0.035. This drew some more attention and yesterday 21 million shares changed hands giving ACYD another push in the right direction. The value increased by nearly 20% which brings the current share price to $0.0425.

Quite a rally, indeed and it is especially astonishing considering the fact that there are no immediate reasons to give the price such a boost. The latest press release was published three weeks ago, the company hasn’t filed any new financial reports and we have managed to intercept no promotional effort running for ACYD at the moment.

Speculations around the message boards suggest that the surge is due to the fact that the company has started with its aggressive efforts to buy back some of the outstanding shares and, indeed, the management team said in their latest press release that they will be reducing the float by purchasing stock on the open market and through privately-negotiated transactions. With no official announcement that this is indeed happening, however, we can not point a finger and say for certain what the reason for the sudden climb is. The question is: “Is the new, higher price a good thing or a bad thing?”.

It remains to be seen, but one thing is for sure – when it comes to penny stocks, surges lasting for a few days often end with a correction. diaDexus, Inc. (OTCMKTS:DDXS) proved this point last week when, after reaching a 52-week high of $2 per share, it fell down to just $1.67 in a matter of four days.

We can’t be sure if ACYD will follow in the same tracks, but it is certainly a possibility. In the long run, the ticker’s behavior should be decided by the long-awaited consolidated financial statement. Until it comes out, American Community (soon to be know as Wialan Technologies) remains a speculative and risky investment. Make sure you do your own due diligence and consider the dangers before making any rash decisions.