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 I always take note of previous stocks that have run and keep that information in the back of my mind. I am watching the markets closely every day because I know that at some point, my hard work will come in handy. 

This is what happened a couple of days ago in Camber Energy (CEI). CEI was a cult stock that ran over 500% a few months back. It had a cult following with a number of Twitter Gurus promoting the stock. 

 

 

Since the big run, the stock was down over 70%, with traders losing interest. This is the type of move I like to call a zombie stock. After weeks of consolidation on next to no volume, a huge burst of volume came into CEI around 3 pm on Tuesday

The stock and volume hit my scanner, and I understood that somebody probably knew something. I bought the stock at $1.14. At 5 pm in the after-hours, CEI issued a response to a short report. The stock opened at $1.34 the following day and I sold some of my position when CEI broke below vwap at $1.30. Some overnight news led to a gap up to $1.34 and gave me an opportunity to exit some of my position at $1.30.

 

Here’s How I traded it:

 

 

These were the reasons for my trade:

 

Fundamentals

Camber Energy, Inc., an independent oil and natural gas company engages in the acquisition, development, and sale of crude oil, natural gas, and natural gas liquids (NGL) in the Cline shale and upper Wolfberry shale in Glasscock County, Texas. 

CEI was in play in September after it was announced that it had entered into an exclusive intellectual property license agreement with a company named ESG Clean Energy (ESG).  ESG Clean Energy, LLC (“ESG”) are developers of Net Zero Carbon Footprints and clean energy solutions for distributed power generation. 

Clean energy and electric car plays have been hot this year. Given the focus on clean energy from everybody from Bill Gates to Al Gore and that being a major focus of the U.N, a number of Twitter influencers and momentum funds helped push the stock over 500% from less than 70c to over $4.70. However, some research from short-sellers took the wind out of the stock’s sails, helping a 70% selloff in just one day, after which the stock didn’t really recover.

 

Technicals

I had been keeping my eye on CEI, and it had fallen into my category of a zombie stock. A zombie stock is a former high flyer that has run significantly but has not had any interest from investors for a significant period. CEI had been bleeding for almost 2 months and had formed a consolidation pattern. 

 

 

The Trade

In my opinion, at around $1 CEI was a good risk/reward play. I thought that this stock could have a dead cat bounce with some sort of catalyst as traders remembered how hard the stock had run in the past. Thus when I saw unusual volume on the tape with no news and no tweets from influencers, that was my trigger to take a position. That type of volume can indicate a continuation.

 

 

Then it just so happened that a press release from the company in after-hours responding to short-seller accusations caused a 20% spike in the stock. I had taken a good risk/reward trade in a zombie stock, which led to a continuation on momentum.

 

Bottom Line

I always take note of previous stocks that have run and keep that information in the back of my mind. 

Usually, after a significant selloff and period of consolidation, these former runners can have a secondary push, usually on some type of news. CEI, a clean energy play, had sold off to around $1, an area which I thought was of good risk/reward. 

Unusual volume brought the stock to my attention on one of my scanners. Realizing that it was likely this stock could move further, as traders remembered how much it had run previously, I took a long position. Some overnight news led to a gap up and gave me an opportunity to exit some of my position.

 

 

 

Author:
Jeff Bishop

One of the best traders anywhere, over the past 20 years Jeff’s made multi-millions trading stocks, ETFs, and options. He is renowned as an incredible trader with a deep insight and a sensitive pulse on the markets and the economy. Jeff Bishop is CEO and Co-Founder of RagingBull.com.

Even greater than his prowess as a trader is his skill and passion in teaching others how to trade and rake in profits while managing risk.

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