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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 ]
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