Is Alnylam Entering A Corrective Phase After A Strong Run?

Alnylam (NASDAQ:ALNY) has corrected by roughly 13% over the past couple of weeks. To understand why this pullback is unfolding now, it is important to examine the stock's structure through the lens of the Adhishthana principles and assess where it stands within its broader cycle.

Alnylam's Weekly Structure

On the weekly charts, Alnylam is currently in Phase 11 of its 18-phase Adhishthana cycle. Back in July, when the stock was still in Phase 10, we published a cautious commentary titled "Alnylam Pharma Stock Outlook: Is ALNY Topping Out?", outlining why a correction was likely to emerge as the cycle progressed. The current price action is unfolding in line with that assessment.

Under the Adhishthana framework, stocks typically form a Cakra structure between Phases 4 and 8. This arc-like consolidation prepares the stock for a breakout in Phase 9, which marks the beginning of the Himalayan Formation. This formation consists of three distinct legs: an ascent, a peak, and a descent.

Alnylam broke out of its Cakra in June, triggering the ascent leg of its Himalayan Formation. This breakout coincided with positive developments around Vutrisiran, the company's drug for transthyretin amyloid cardiomyopathy, which helped reinforce bullish sentiment. The stock continued to trade strongly through Phase 9 and Phase 10.

While Phase 10 often presents a window for peak formation, we noted in our earlier analysis that Alnylam was more likely to form its peak in Phase 11. That scenario has now played out. Shortly after entering Phase 11, the stock formed a high near 495.55 and has since entered a corrective phase. From the peak, the stock has already declined by over 20%, signalling the start of the descent leg.

Investor Outlook

With the descent leg now underway, the stock is likely to remain under pressure in the near term. Aggressive buying at this stage of the cycle is not advisable. Investors who already hold positions should consider hedging, as the structure suggests that Alnylam may revisit its Phase 9 levels before the descent phase fully concludes.

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