FactSet Shares Likely To Stay In A Prolonged Downtrend

FactSet Research Systems (NYSE:FDS) is currently in Phase 9 of its 18-phase Adhishthana Cycle on the monthly charts. The stock has just broken down from its critical Cakra formation, a bearish signal that could weigh on performance for a long time. Here's what went wrong and what may lie ahead under the Adhishthana framework.

What Went Wrong for FactSet?

Under the Adhishthana Principles, stocks typically form a Cakra between Phases 4 and 8. This channel-like structure with an arc usually carries bullish implications, and a Phase 9 breakout to the upside often sparks the Himalayan Formation with strong upward momentum.

A recent example of this is Bloom Energy, which followed this exact path. You can check our commentary here.

FactSet, however, failed to follow this trajectory. The stock respected its Cakra for more than a decade, stretching from December 2009 through July 2024. But instead of breaking upward in Phase 9, FactSet broke down on the flip side. This triggered what the framework defines as the Move of Pralaya.

As outlined in Adhishthana: The Principles That Govern Wealth, Time & Tragedy:

"When the underlying breaks the Cakra on the flip side, consolidation typically extends into the Guna Triads. The move that follows is highly significant, and selling pressure can be extremely strong. This is called the Move of Pralaya."

Since the breakdown, FactSet has already fallen about 36%, dropping from $450 to around $295.

What's Next for FactSet?

Once the Move of Pralaya is triggered, underperformance typically continues until the Guna Triads (Phases 14, 15, and 16). On the monthly charts, that means more than a decade before FactSet reaches those phases, suggesting a long stretch of weakness.

A Cakra breakdown also implies something fundamentally wrong within the company's structure, even if it's not immediately visible in analyst upgrades or sentiment shifts. While UBS recently upgraded FactSet, our outlook suggests the signal carries little weight against the structural breakdown in play.

Investor Outlook

Caution is advised as a Cakra breakdown often signals trouble brewing within the company. Since the breakdown, the stock is already down ~36%, and data suggests this underperformance could persist for a long time. While occasional rallies may show up, they're unlikely to hold over the long term.

Options activity also shows heavy call writing in out-of-the-money strikes, reflecting continued skepticism. Investors looking to buy might want to hold off for now. All signs point to FactSet staying weak for some time, and that's a fact.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy