Are breakouts that move more than 10% below from pivot in a single day prone to failure?

If a stock has to rise 20% or more just to get to its pivot point, that’s a possible warning sign that the handle is too loose. Such breakouts are definitely more prone to failure. In relation to a base, a good handle should appear tight and narrow on the chart. From its high to low, the handle shouldn’t decline more than 10% to 15%, especially if the decline in the overall base is between, say, 20% and 40%. For instance, when Blockbuster broke out on April 24, it left a base that corrected 39% from high to low. In the handle, the decline was just 8%. In a severe bear market, however, some great stocks do form a handle whose decline is 20% or more, and they go on to new highs.

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