What's Driving Lamb Weston's Sustained Underperformance

Lamb Weston (NYSE:LW) has struggled to regain momentum since July 2023. The stock has remained under persistent selling pressure and continues to trade with pronounced bearish sentiment. When viewed through the Adhishthana framework, this weakness is not incidental but structural. Let's break down how the stock's weekly and monthly cycles deteriorated and what that implies going forward.

The Weekly Chart Breakdown 

On the weekly charts, Lamb Weston is currently in Phase 12 of its 18-phase Adhishthana cycle. To understand the root of this prolonged underperformance, we need to rewind to Phase 4.

Under the Adhishthana Principles, stocks typically begin forming a Cakra structure between Phases 4 and 8. This arc-like formation usually carries bullish implications and prepares the stock for a breakout in Phase 9, which marks the beginning of the Himalayan Formation.

Lamb Weston entered Phase 4 in December 2019 and, through Phase 8, successfully formed a Cakra pattern. This period coincided with a strong uptrend in the stock. However, instead of breaking out to the upside in Phase 9 as expected, the stock reversed and broke its Cakra on the downside.

A downside Cakra break triggers one of the most bearish outcomes in the framework, known as the Move of Pralaya.

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

"When the underlying breaks the Cākra on the flip side, it typically draws consolidation up to the Guna triads. The movement after the break is highly significant, and the selling momentum is extremely strong. Such a move is called the Move of Pralayā."

True to the principles, once Lamb Weston broke its Cakra, sustained selling followed. The stock has declined by over 61% since, and this stretch of underperformance is expected to persist until the stock reaches its Guna Triads in Phases 14, 15, and 16. Only then will clarity emerge on whether a meaningful reversal is possible.

What Went Wrong? The Monthly Chart Tells the Story

To understand why a stock that had rallied strongly until mid-2023 collapsed so sharply, it's important to examine the monthly chart.

On the monthly timeframe, Lamb Weston is currently in Phase 2. Under the Adhishthana Principles, Phase 2 unfolds in two distinct segments. The first is the Sankhya period, typically marked by consolidation or corrective behaviour. This is followed by the Buddhi period, which often delivers strong and sustained upside momentum.

In Lamb Weston's case, the stock deviated from this natural rhythm. Instead of consolidating during its Sankhya period, the stock rallied prematurely. Such early strength in Phase 2 often proves unsustainable and is usually punished when the stock transitions into the Buddhi phase.

That is exactly what played out. As the stock entered the Buddhi period, it collapsed sharply, giving up prior gains and reinforcing the bearish setup. This deviation highlights how Adhishthana principles help identify rallies that lack structural support.

Investor Outlook

With a downside Cakra breakdown on the weekly charts and a Phase 2 deviation on the monthly charts, Lamb Weston remains structurally weak. The current bearishness is justified and likely to continue.

Investors considering increasing exposure on a perceived value basis should exercise patience. A clearer opportunity will only emerge once the stock enters its Guna Triads, where the framework can better assess whether a durable reversal toward prior highs is even possible. Until then, caution remains warranted.

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.