American luggage and handbag design retailer Vera Bradley, Inc (VRA) is solidly in recovery mode, up 21.5% so far in 2019 and in bull market territory at 31.1% above its Dec. 27 low of $7.94. Despite this gain, the stock is also in bear market territory at 40.1% below its 2018 high of $17.38 set on Sept. 10.
There are many stocks that have similar performance statistics as Vera Bradley. From its Sept. 10 high of $17.38 to its Dec. 27 low of $7.94, the stock crashed by 54%. This bear market is being consolidated with the bull market correction of 31.1%.
Analysts expect Vera Bradley to report earnings per share of 24 cents when the company releases results before the opening bell on Wednesday, March 13. On June 6, the retailer beat analysts’ earnings estimates, and the stock headed higher. On Sept. 5, another earnings beat caused a price gap higher and led to the Sept. 10 high of $17.38. The shares slumped significantly from the high, and an earnings miss on Dec. 12 propelled the stock to its Dec. 27 low. Vera Bradley stock has a reasonable P/E ratio of 14.22 according to Macrotrends.
The daily chart for Vera Bradley
The daily chart for Vera Bradley clearly shows the bear market decline of 54% from the Sept. 10 to the Dec. 27 low. Since the low, the stock has had a steady rise, and the high at $10.48 on Monday, March 11, was a new 2019 high. The stock suffered a “death cross” on Dec. 10, when the 50-day simple moving average crossed below the 200-day simple moving average to indicate that lower prices would follow. This signal was in play at the Dec. 27 low.
The close of $8.57 on Dec. 31 was an important input to my proprietary analytics, which resulted in my quarterly pivot at $9.86. The close of $9.55 on Feb. 28 was the latest input to my analytics and resulted in my monthly value level at $9.08. The stock is above its 50-day simple moving average at $9.32 and below its 200-day simple moving average at $12.33.
The weekly chart for Vera Bradley
The weekly chart for Vera Bradley is positive, with the stock above its five-week modified moving average of $9.79 and below its 200-week simple moving average, or “reversion to the mean,” at $12.14. Note how the retailer’s stock has been below its “reversion to the mean” since the week of Nov. 16. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week rising to 60.96, down from 47.72 on March 8.
Trading Strategy: Buy Vera Bradley shares on weakness to my quarterly pivot at $9.86 and to my monthly value level at $9.08, and reduce holdings on strength to the 200-week and 200-day simple moving averages at $12.14 and $12.33, respectively.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.