Brazilian homebuilder Gafisa (NYSE:GFA - News) is in the sixth week of a possible cup base.

The base is 24% deep, which is acceptable for a cup-type pattern.

Should Gafisa complete the pattern, it would be a second-stage base. It broke out of a first-stage base in July. First- and second-stage bases have a much better track record of success than third- and fourth-stage bases.

While the weekly chart shows one net week of accumulation, Gafisa could use some additional accumulation. Its Accumulation/Distribution Rating is D+ -- indicating some institutional selling. Still, that D+ is an improvement over a D- rating about a week ago.

One other area that could stand improvement is Gafisa's industry group. As of Monday's IBD, the group was No. 109 out of 197 industry groups.

Gafisa has the best fundamentals in the industry: a 98 EPS Rating and an A in Sales + Profit Margin + ROE.

The two stocks in the group with the highest EPS and SMR ratings are both foreign homebuilders -- Gafisa and Mexico's Homex Development (NYSE:HXM - News).

Gafisa's Relative Strength line has risen since early November. A move to a new high would be even better.