Vera Bradley

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Nearest Resistance: $38

Nearest Support: $33

Catalyst: Bad Guidance Vera Bradley ( VRA), another of yesterday's short-squeeze plays, is another small-cap apparel stock that's getting hammered today following bad guidance issued after yesterday's closing bell. Even though VRA posted impressive revenue and profit numbers for this quarter, it was weak guidance that caused this stock to gap down at the open today.

Since February, VRA has been forming a broadening formation, a setup that's bounded by diverging trend lines. A broadening formation indicates that price action is getting less predictable -- statistically, this setup is more likely to resolve lower than higher.

Sure enough, shares are threatening to break down through the lower trend line today. Now could be a good time to look at a short position in VRA. I'd recommend keeping a protective stop at the 50-day moving average.

If you liked this article you might like

What's Doing Best in New Portfolio? Take a Guess

Random Action as Market Prepares for Jackson Hole

We're Seeing the First Signs of Serious Efforts on Tax Reform: Market Recon

Happy Early Returns From This Value-Oriented Dividend Portfolio