Camber Energy's Stock Plunges 50%: What's Next After Short Report Takes Aim At Mr. Zack Morris?

Camber Energy, Inc CEI was halted to the downside multiple times on Tuesday after Kerrisdale Capital issued a short report on the company.

The stock has been trending across various social media platforms, led by @MrZackMorris who has over 552,000 Twitter followers and a newly created subreddit, r/ZackStreetBets, with over 32,000 members.

Kerrisdale Capital addressed the Camber Energy bulls directly in its report: “Camber pumpers have seized upon the notion that the company is now a play on carbon capture and clean energy, citing a license agreement recently entered into by Viking. But the 'ESG Clean Energy' technology license is a joke."

“Finally, we want to thank Zack for giving us the most fun actionable short since $GSAT in 2014,” Kerrisdale Capital wrote on Twitter.

@MrZackMorris responded with a message to his followers: “Sorry guys looks like they are coordinating attacks on us. Manage your positions,” he wrote.

The Camber Energy Chart: By midafternoon Camber Energy had plummeted over 65%, at one point. When the stock fell it tagged the 200-day simple moving average (SMA) and bounced back up toward a support and resistance level at the $1.36 mark.

Camber Energy declined on big bearish volume, which demonstrates there are far more shares available for sale than there are buyers. The short report likely triggered a high level of fear for retail traders who scrambled to exit their positions en masse.

For technical traders, Camber Energy’s stock was likely to retrace regardless of the report because on Sept. 30 the relative strength index (RSI) reached an unhealthy 90%. When a stock’s RSI nears or exceeds the 70% mark it becomes overbought, which is a sell signal.

The bearish price action caused Camber Energy to lose support of the eight-day and 21-day exponential moving averages, which is bearish. Although the eight-day EMA is still trending above the 21-day, it's likely the eight-day will cross below the 21-day if the stock is unable to regain the $2.80 level quickly.

• Bulls want to see sideways consolidation on low volume, which would indicate the fear selling has subsided. If Camber Energy can close the trading day above the $1.36 level, its next resistance level is at the $1.84 mark.
• Bears want to see sustained big bearish volume force Camber Energy back down below $1.36, which could eventually cause the stock to lose support at the 200-day SMA. Below the level there is support at 78 cents.