close icon

SEIC Stock Enters Elliott Wave Buy Zone

Four months ago, we published an article on SEI Investments (NASDAQ:SEIC), saying that the “stock can lose half its value in a recession.” At the time of writing, November 5th, 2019, the economy was still firing on all cylinders and most analysts saw nothing but blue skies.

And indeed, the unemployment rate was at a record low, the US-China trade war was easing and the stock market was at a record high. Furthermore, SEIC, in particular, is a great business with exceptional financials and a long track record of profitability. What then led us to such a bearish conclusion in early-November? Take a look.

SEIC stock to drop 50% if a recession hits

SEIC’s weekly chart revealed something no Elliott Wave analyst can miss. The recovery from the bottom of the Financial crisis in 2009 to $78.35 nine years later was a textbook five-wave impulse. The pattern was labeled (1)-(2)-(3)-(4)-(5), where the sub-waves of waves (3) and (5) were also visible.

The Wave theory states that a three-wave correction in the opposite direction follows every impulse. So, we thought the decline to $42.27 by December 2018 must be wave (a) of a simple (a)-(b)-(c) zigzag. This, in turn, meant that once the recovery in wave (b) ended, another selloff in wave (c) would be very likely.

SEIC Stock Plunged Way Faster than Expected

The fifth wave is often erased completely by the subsequent retracement. So, a bearish reversal near $70, followed by a drop to ~$35 would translate into a roughly 50% loss for shareholders. The updated chart below shows how things went.

SEIC stock plunges as coronavirus panic hits global markets

SEIC climbed to $69.52 in mid-February, 2020. Then, completely out of the blue, the coronavirus pandemic paralyzed the world. Stock markets around the world started crashing and SEI Investments crashed with them. In about a month, the company’s valuation was reduced by over 42%.

SEIC fell as low as $39.44 yesterday and is now approaching the 61.8% Fibonacci support level. Wave (c) already breached the bottom of wave (a), which means the 5-3 wave cycle that began in March 2009 is almost complete now. A bullish reversal in the $35-$30 area can be expected to give the start of a fresh new uptrend in SEI Investments.

In addition, the company just announced it is increasing its stock repurchase program by another $250 million. Apparently, it is not just us who think the shares are a good deal now.

Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Essex Property to Lose Half After Reaching New Record

Essex Property saw its stock price drop to as low as $176 during 2020’s Covid selloff. From the October 2019 all-time high of $334, that was a 47.3% total decline in less than five months. Fast-forward to today, it feels as if 2020 was just a bad dream. The stock is hovering around $307 right…

Read More »

Cathie Wood’s ARK to Add 40% Before Turning South

In the twelve months between the Covid crash bottom in March 2020 and February 2021, the ARK Innovation ETF returned 385%. Bold bets on disruptive and promising, yet still money-losing companies turned fund manager Cathie Wood into an investing superstar. However, after the fund’s staggering surge from just $33 to nearly $160 a share, it…

Read More »

Ryman Stock Can Revisit Its Covid Crash Lows

Retirement homes were hit especially hard by COVID-19. Sadly, many of their clients lost their very lives as elderly people are the most vulnerable demographic. And although New Zealand and Australia have so far dealt with the pandemic better than most, the spring of 2020 was a real nightmare for companies like Ryman Healthcare. With…

Read More »

Toronto-Dominion Another Canadian Bank to be Wary Of

A few days ago we shared our bearish stance on Royal Bank of Canada. Its price chart revealed a textbook pattern that took 25 years to develop. Today, we are going to examine another one of Canada’s Big Three banks – Toronto-Dominion. The second largest bank in Canada came into existence after the merger of…

Read More »

Royal Bank of Canada Looks Toppy and Dangerous

Canadian banks are known to be much more conservative than their U.S. peers. For instance, due to better lending practices, the country barely felt the 2007-2009 housing crisis. That did not prevent its stock market from collapsing in sympathy, though. The share price of the Royal Bank of Canada for example – the biggest financial…

Read More »

SEI Investments is Up 80%, Can Keep Climbing

It was March 19th, 2020, and the world appeared to be coming to an end. Governments around the globe were rushing to impose lockdowns to curb the spread of COVID-19. The entire world economy was suddenly stopped in its tracks. U.S. stocks suffered their fastest fall into a bear market in history, down over 35%…

Read More »

Canada Goose Elliott Wave Pattern Points North

Canada Goose stock reached its all-time high in November 2018 and has been trading below it ever since. The coronavirus selloff actually led it to a record low, erasing its entire gain as a public company. But March 2020 turned out to be a great time to buy. The share price is up 210% from…

Read More »

More analyses