SEI Investments provides investment management, processing and platforms for private banks, institutional investors and investment advisors and managers. With a market cap of roughly $9.4 billion, the company is in the mid-cap category, which is generally thought to offer some of the best growth potential opportunities. But is SEIC stock a good choice around $62 a share?
The company derives a big chunk of it revenues from fees on assets under management. Since the value of those assets depends on their market quotations, SEI Investments’ profits tend to rise and fall with the general market.
It is not a secret that we are no optimists when it comes to the U.S. stock market right now. No trend lasts forever and the post-2009 bull market is already old enough. This means that SEIC stock is probably vulnerable, as well. Let’ see if we can confirm this assumption with the help of the Elliott Wave principle.
The weekly chart above reveals SEIC stock’s entire progress since the $9.19 bottom in March 2009. It can be seen as a textbook five-wave impulse, labeled (1)-(2)-(3)-(4)-(5), whose fifth wave lifted the stock to $78.35 nine years later.
The pattern has developed within the parallel lines of a trend channel and the sub-wave of wave (3) and (5) are also visible. The guideline of alternation delivered an expanding flat correction in wave (2) and a sharp zigzag in wave (4).
Aging Bull Market Threatens SEIC Stock Outlook
The Elliott Wave theory states that a three-wave correction follows every impulse. In this respect, the sharp selloff from $78.35 to $42.27 fits perfectly as wave (a) of the corresponding three-wave retracement. This means the current recovery to $62.28 so far must be part of wave (b).
If that is the case, we can expect another plunge in SEIC stock as soon as wave (b) is over. The support area of wave (4) near $35 a share is a natural target for the bears. Assuming wave (b) is going to make it to the $70 mark, this would be a 50% decline in wave (c). Whether it coincides with a recession or not remains to be seen…
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!