Camber Energy Inc (NYSE:CEI) was skyrocketing more than 100% at one point on Monday after announcing it bumped up the date of its 1-for-50 reverse split to Wednesday, Dec. 21.
After the reverse stock split takes place, Camber Energy's common stock will be reduced from 1 billion shares to 20 million shares outstanding. The greatly reduced float could tip the scale of supply versus demand in favor of investors.
Reverse stock splits aren't usually a good sign, however. A reverse split can be a sign that a company is struggling financially and in Camber Energy's case, the company could have been in danger of being delisted due to the stock price falling almost 100% since Sept. 29, 2021, to reach a low of 6 cents on Friday.
Although shareholders' equity in Camber Energy won't change based on the reverse split, the event could kick off a short period of high volatility. Traders and investors who aren't already in a position may choose to wait until Camber Energy settles into a new pattern after the split takes place.
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The Camber Energy Chart: When Camber Energy surged on Monday, the stock negated its long-term downtrend which began on March 9. For a new uptrend to occur, Camber Energy will eventually need to retrace lower to print a higher low above 6 cents.
- On Monday, Camber Energy was working to print either a doji or shooting star candlestick on the daily chart, which could indicate lower prices will come on Tuesday. If buyers come in and cause Camber Energy to close near the high-of-day, the stock will print a bullish kicker candlestick, which could indicate higher prices are on the horizon.
- When Camber Energy surged on Monday, the stock tagged the 50-day simple moving average (SMA) and rejected the level as resistance. If Camber Energy is eventually able to regain the 50-day SMA as support, it would give investors more confidence going forward.
- Camber Energy has resistance above at 15 cents and the 19-cent mark and support below at 10 cents and the at the low of 6 cents.
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