Benzinga - Camber Energy, Inc (ARCA: CEI) plunged more than 30% to reach a new split-adjusted, all-time low on Thursday after enacting the 1-for-50 reverse stock split on Wednesday.
When the company announced it had bumped up the date of its reverse split on Monday, Camber Energy surged almost 150% at one point but has since given back all its gains and more.
A period of high volatility often takes place near a stock split but Camber Energy’s steep sell-off is somewhat unusual. It’s likely traders and investors used the news of the upcoming split and the soaring prices earlier in the week to exit their positions and fear selling has caused the stock to continue to plummet.
Despite the plunge, Camber Energy is likely to bounce up temporarily over the next few trading days because the stock is beginning to develop reversal signals on the daily chart.
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The Camber Energy Chart: Camber Energy has plunged 52% since Monday’s opening price without bouncing to print at least a lower high on the chart. Stocks never move in straight lines in either direction for a long period of time without a temporary reversal.
- Camber Energy is also likely to bounce because the stock’s relative strength index (RSI) is measuring in at about 32%. When a stock’s RSI nears or reaches the 30% level it becomes oversold, which can be a buy signal for technical traders.
- If Camber Energy closes Thursday’s session with a lower wick, the stock will print a hammer candlestick, which could indicate a bounce will come on Friday. If the stock closes the trading day near its low-of-day price, Camber Energy will form a bearish kicker candlestick, which could indicate the sell-off isn’t over and the bounce won’t come for a few more days.
- Camber Energy has been trading on much higher-than-average volume since Friday, which indicates a high level or interest. Eventually, the volume will begin to decline as the stock consolidates and runs out of buyer and sellers. Traders may want to wait until the volume decreases to average, and the stock settles into a new split-adjusted pattern, before taking any position.
- Camber Energy has resistance above at $4.19 and $5.16 and support below at $2.86 and the psychologically important $2.50 mark.
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