Always Count Bases Before Buying A Stock

Knowing what stage a stock is in can save you a lot of frustration.

If you buy a breakout from an early- stage base, you could be in for a nice, long ride.

But be wary of buying late-stagers (fourth or beyond). These are more prone to failure because they've been in the market's spotlight for some time and have already had a substantial advance. There may be few buyers left to push it higher.

Each base or consolidation should be at least seven weeks long (a flat base can be as short as five weeks).

Breakouts from each base must result in a gain of at least 20%. If the advance is less than that, and the stock builds another base, that's called a base-on-base pattern and counts as a single base.

If a stock undercuts the low of a prior base, that resets the base count and wipes the slate clean.

With that said, take a look at the accompanied chart and identify in what stage it is.