Learning to read stock charts takes time. The best way to become proficient is to continually study chart patterns. With practice, you will learn to spot emerging leaders that are forming proper basing chart patterns. With that in mind, here are some potential landmines to avoid.

• Studies show that short bases of 2, 3, or 4 weeks are risky and should be avoided. Generally speaking, the longer the base, the bigger the price gains after the breakout.
   
• Volume should be high as the stock breaks out from a basing pattern. It's important to have high volume—at least 50% above the stock's average volume of the past 50 trading days—because it normally shows professional investors may be jumping into the stock.
   
• Stocks that race straight up from the bottom of a pattern into new high ground without any price dips or handles are more risky and frequently encounter sharp price pullbacks or declines.
   
• Patterns in which prices fluctuate too widely are more risky. These wider, more loose appearing bases usually occur as fourth stage bases.
   
• The "handle" portion of a cup-with-handle base should not fall more than 10% to 15% from the start of the handle, though you can allow it to break down up to 20 % to 30% during bear markets.
   
• When a stock breaks out from a basing pattern, make sure the relative strength line (a line that traces the price of a stock in relation to the Standard & Poor's 500 Index, providing a comparison of the stock's price action vs. the overall market) is moving up with, or ahead of, the stock. If the line is lagging the stock into new high ground, it could be a weaker breakout because it indicates the stock is not keeping up or ahead of the rest of the market.
   
• In a cup with handle, the handle should build in the upper half of the entire basing pattern. For example, if a stock has dropped from $50 to $40 at the bottom of the cup, you want the midpoint of the handle to form above $45. Also, handles should not be wedging upward along three price lows.

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