It’s been five years since we first wrote about SEI Investments in November, 2019. A few months before the pandemic swept over the world, the stock was trading just above $62 a share. Elliott Wave analysis, however, made us think that the price was going to fall significantly soon. The reason for our pessimism was the textbook five-wave impulse SEIC had drawn between 2009 and 2018.
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According to the theory, a three-wave correction follows every impulse. As the chart above shows, by November, 2019, only waves (a) and (b) were in place already. Wave (c) down was still missing, hence our bearishness. Given that it was supposed to breach the bottom of wave (a), we wrote that “the support area of wave (4) near $35 a share is a natural target for the bears.” A few months later, Covid-19 struck and this happened:
Wave (c) dragged SEIC to $35.40 on March 23rd, 2020. Four days earlier, we published the chart above to tell our readers that the stock is likely to bounce up from the 61.8% Fibonacci support level. It was “expected to give the start of a fresh new uptrend in SEI Investments.” And it did… Well, kind of.
The 61.8% Fibonacci support did cause a notable rally to over $65, but instead of continuing towards a new record, the price remained range-bound until late-2023. So on December 1st, 2023, we decided to take another look and include the pre-2009 period into the analysis. As the chart above reveals, the post-Covid sideways movement looked like a triangle correction, marked (a)-(b)-(c)-(d)-(e) in wave IV.
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This meant that the 2009-2018 uptrend was wave III and the 2008 crisis was wave II. The late-2007 top was therefore labeled as the end of wave I. With all that in mind we concluded that SEIC stock was still supposed to reach a new all-time high above $80 a share in wave V. Last week, it finally did.
The price broke out of the triangle pattern in early-2024 and after turning its upper line into support in wave (2), kept rising in what should be wave (3) of V. Once it is over, waves (4) down and (5) up should complete SEIC’s multi-decade impulse pattern. Just as the 2009-2018 impulse was followed by a big correction, so should this bigger one. If this count is correct, a three-wave drop back to the support of wave IV near $40 a share would make sense once wave V is over. Assuming a bearish reversal around the $90 mark, that’ll be a drop of more than 50%. Something most investors would rather watch from a safe distance.
