Vera Bradley, Inc. (NASDAQ: VRA)

Vera Bradley, Inc., through its subsidiary, Vera Bradley Designs, Inc., engages in the design, production, marketing, and retail of stylish and functional accessories for women under the Vera Bradley brand. Its products include a range of handbags, accessories, and travel and leisure items. The company sells its products to specialty retailers primarily in the United States, as well as to national retailers and third party e-commerce sites. As of January 28, 2012, it sold its products directly through 48 full-price stores and 8 outlet stores in the United States; 7 pop-up stores in Japan; Websites, including verabradley.com and verabradley.co.jp; and an annual outlet sale in Fort Wayne, Indiana. The company was founded in 1982 and is headquartered in Fort Wayne, Indiana.

To review Vera’s stock for potential trading opportunities, please take a look at the 1-year chart of VRA (Vera Bradley, Inc.) below with my added notations:

1-year chart of VRA (Vera Bradley, Inc.)

VRA had been trending lower since October of last year and appears to have bottomed out in June. Over the last (4) months the stock has established two important price levels worth watching: The $20 support level (blue) and the common resistance level (red) at $25. The stock is currently sitting right below its resistance.

The Tale of the Tape: VRA is sitting between its levels of $20 and $25. A long trade could be made on a pullback to the $20 support or on a break above the $25 resistance. A short trade could be made on a rally up to $25 or on a breakdown below $20.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT