Camber Energy Stock (CEI)....

hey everyone me kevin here so camber

energy got crushed today camber energy

is a stock that was once 33 cents

ran all the way up to

four dollars and 85 cents intraday on

september 29th

and is presently down 50 on the day with

another 18.3 in after hours this is the

definition unfortunately or what has had

become the definition unfortunately of a

momentum stock

that ran very substantially especially

on news of patent carbon detection

carbon capture technology from a firm

named a viking for which

camber energy owns about a little over

70 percent of

and so there was a lot of excitement

about this new patented technology

despite the fact that it's only

applicable in canada and this enthusiasm

has been especially prominent as oil

prices have gone up

problem is some of this energy started

fading this momentum energy started

fading on the first and second and

usually what happens when we get fades

in momentum kind of stocks is we can

look at companies like metamaterial

zoom out and it's not uncommon to see

substantial and drop drawdowns

once we start down a path of declines

this happened with metamaterials

it happened with new egg and it happens

with most momentum stocks or cryptos

that run large and then slowly just

bleed out in this case however camber

energy received a short seller report

that helped basically push it into the

ground

now it's worth noting that in the short

seller report which i have right here

the document does say that the analysts

who prepared this report are compensated

based on among other factors the overall

profitability of the author's operations

and their affiliates

and when this particular company comes

out and bluntly says we are short shares

of camber energy

and they are hiring an analyst

or analyst to put this report together

calling the esg clean energy technology

license a joke

then you know the short seller report is

a little bit of a slam however the

reason this short seller report was so

damaging is because it's right about a

couple of things

number one

it is correct that the license that was

the basis for this penny stocks momentum

the technology license

is exclusive to canada now the short

seller claims that this is just a five

million license i was not able to verify

that information but i was able to

verify that this license is exclusive

only to canada and we can see that by

looking at the 8k when camber energy

announces this information in it where

they say exclusive territory means the

country of canada

worth noting that canada has a

population of about 40 million people

just slightly larger than the state of

california so and that's uh maybe what

12 13 percent of america's population so

obviously the fact that it's exclusive

exclusive to canada would represent the

potential for a much smaller market

share or pie

then and this is difficult to uh to to

verify without

being an expert and going through the

different classes of these shares so i'm

going to reference the allegations here

and then we're going to get into a

little bit of technical analysis here

and and suggestions here

but the company does mention that

if camber energy's class c shareholders

end up redeeming their shares for class

a shares then the class a share were

common shares rather there was no class

co there's no class a it's just common

shares

then the fully diluted market cap of

this company companies actually closer

to 900 million dollars and that's

because every single class c share

allows you to purchase or convert into

about 43 885 shares of common stock

and so these are things that let's see

they give

citation number seven they give the 10-q

quarter end for 9 30 20 20. and they

show specifically a reference here to

page 53 stating that the 2693

shares of series c preferred shares

outstanding can convert into

118 million shares of common stock they

provide some background on why camber

shares would be worth substantially less

if these class c shares were converted

now there are a lot of terms and

conditions that go into the rights and

abilities and timing of when shares can

convert and i'm not going to go down

that rabbit hole what matters most is

not necessarily fighting the short

seller but asking is this a company that

we fundamentally want to be invested in

and this is what's important to me is

always understanding the difference

between a momentum play

into fundamental play

a momentum play is something where if

you lose money in a trade often times

unless it's a gme or amc

and and not even in all cases for gme

and amc depending on what you bought

unless it's something that has reason

for for

having momentum last like a real

movement like the ape army right uh the

the amc uh movement unless

there is a reason for believing that

kind of society exists and that that

cohort of investors exists and it's

large enough to actually keep the stock

price elevated

momentum plays are ones that when

momentum starts going down you should

generally close your position out of and

now some people say that's paper handing

but as a trader it's important to

remember that trades go up and they go

down the purpose of trading is to get in

the ride make money and then sell

hopefully you sell at a profit and your

goal is to sell at a profit seven to

eight times out of every ten trades you

make you always know they're going to be

losers

the danger is being invested in

something that's a momentum play then

sticking in it

even though the fundamentals might be

weak now separately from the short

seller report here are some of the

fundamentals that are worth noting

the revenue for this company is down

about 450 in the last month

revenue is down about 85 year-over-year

to about four hundred thousand dollars

in revenue in twenty twenty that's it

it's a public company with four

hundred thousand dollars of revenue in

2020. some of us watching this video

make more money than that

uh

as their salary and this is a public

company with four hundred thousand

dollars of revenue their trailing 12

months is even worse at 300 000 of

revenue their eps is obviously negative

viking their book value is no better the

fundamentals for this company are not

very good the company's valuation has

soared following the announcement of

this exclusive ip license for carbon

capture technology but again that is

exclusive to china now here was one of

the posts from reddit that showed some

of the dd or due diligence that went

into the theory for

investing in camber they mentioned

shares are continuing to fly higher

after breaking out of what technical

traders are calling a falling wedge

pattern falling wedge pattern is a

pretty simple it

is essentially taking your trend line

and i'm going to give a very rudimentary

analysis here and you're trying to get

to a triple touch i'm just going to do a

rough rough job here and kind of slap

these down really quick uh and generally

what you're looking for is some sort of

indication that you have

a down trend i wish i could get three

touches here but i'm not really doing a

good job of getting three touches here

so you've got this downtrend wedge

pattern and when you break out above the

particular pattern this is when you

potentially see larger runs after

breaking out of this channel so to speak

breaking out is seen as something very

bullish i'm giving a very rudimentary

example here okay i could go much more

detailed on falling wedge patterns we're

not going to do it here the stock was

able or the stock was getting condensed

between narrowing highs and lows before

was able to cross

across pattern resistance the problem is

folks

people try to use technical analysis on

momentum stocks and that's fine

but you have to be very very careful

because once the momentum bleeds it can

bleed fast and consistently and support

lines don't matter as much so in my

opinion if you're trading momentum

stocks you really want to make sure you

have a lot of touch points and that

they've been tested outside of the

couple of weeks that you're trading with

them if you're day trading you're

trading within the hours within the 30

minute time frames whatever then that's

different then go ahead use the patterns

but if you're trading this day day day

swing trading i would just be cautious

because things can trade quickly if

you're day trading great these are

stocks you can take advantage of moving

with

stock you know then we get something

like this the stock is trading above its

50-day moving average and the 200-day

moving average well duh but that doesn't

necessarily mean that sentiment for the

stock is bullish beyond it being a

momentum stock that's not necessarily

something i would use on a momentum

stock to go oh it's above its 50-day and

200-day moving average well duh you'd

probably be better off using an ema line

to try to know when you're trading above

or below or at that line

as for for smaller swing trading entry

points so for example here's the ema 20

that is something that i like to use

when you get little touches on the ema

20 those can be really good

opportunities to get in and using the

exponential moving average because it's

much more sensitive to to stocks that

swing as much as this right here and you

see that as the yellow line here so when

you get these drops below the 20e ema

that's great this is a you're generally

trending above it you try to get in

below that ema and you try to get out

substantially above it at some point now

when you start consistently trading

under the ema 20 that's when you're

probably losing momentum so turn on that

ema

in my opinion using a 50-day moving

average and 200-day moving average

that's what you use on like google or

apple don't use that on a swing trade

stock and stay away from rsi oh my

goodness i say this all the time the

individuals especially those in the

stocks and psychology money group we

talked to yea you mentioned this in some

of the lectures you've got to be careful

with rsi because when you get momentum

no duh

you're going to see rsi up rsi is a

dangerous indicator and it's meant for

relativity and i mentioned relativity

because what you're trying to do here

let's pull it up i'll show you this is

just my version of

understanding rsi and how i like to use

it i'm going to go to the day job when

you look at rsi all this is telling me

is that in this period of time on the

day chart we have more buying pressure

here than we have selling pressure sure

maybe there's an opportunity to buy

right here but you have to be careful

when you're just getting from out of

sold to no longer or

overbought when you're just getting out

of the overbought territory you have to

be careful that you're not momentum

swinging out one of the last things i

would use is rsi on on momentum

especially on the day chart now if i

wanted to use rsi today tray to trade

within

that i'm more okay with

i'm much more accepting of using rsi for

example you get an rsi low over here of

about 43 this is an opportunity to buy

and look it's also under the ema 20. you

get these this sort of alignment here

this now i like better and so on a day

trade this is a stock that you can take

advantage of and i certainly would not

want to be buying on the rsi over here

i'd be waiting again for some of those

lower dips where you can see the rsi

again gets into those mid 40s

but folks when when you start uh when

you start selling off a momentum you can

tend to continue to sell up now the

question is do you buy this dip

well you have to monitor the social

trends for this one and this is much

more difficult and generally takes

nuance you have to see what people are

saying in social media because social

media is what propped this up in the

first place what i like to do is look at

google trends but the issue with that is

google trends

for camber energy are probably going to

be high today in fact let's look it up

today the reason they might be high

today is because they had a short seller

report so you're not necessarily having

positive searches for the stock yeah in

fact you had a massive surge of

searching uh today specifically for this

stock so the question now is is this

going to last beyond the short seller

report that's the big question

and can you get a bounce it depends on

how loyal the audience is if you believe

in the stock fundamentally long term and

you see a reason why this canadian

license is going to be a boom

then then keep hodling if uh you're in

this to make money get in get out i

don't know that i would personally hold

bags i would probably get out me

personally i would wait for an

opportunity where i saw some real

support to get back in and do my trading

but that's the nature of being a trader

versus a huddler hodlers by the dip

traders

buy indicators

like being under the ema 20 or

combination of indicators or being at a

uh you know breaking through a support

line and seeing it bounce off

of another support line to come

potentially back that's in my opinion

how traders operate if a trader's saying

oh i'm buying the dip and that's their

sole strategy for trading

not good enough in my opinion bad anyway

these are just my thoughts my heart goes

out to obviously anybody who's lost

money and congratulations to those who

have made money i would probably take

teddy's

and if you could find again an

opportunity to get back in by all means

do it thanks so much for watching folks

and we'll see in the next one

[Music]