Coming Week: Brokers on Duty

Many individual investors (still!) take their cues from tech stocks, or maybe energy or emerging markets. But the pros on Wall Street watch their own sector as the prime "tell" of the market's health, or lack thereof.

Brokerage earnings take center stage in the coming week, and results from Goldman Sachs (GS), Lehman Brothers (LEH) and Bear Stearns (BSC) may determine if last week's bounce proves fleeting or sustainable.

The brokerage stocks were "darlings that broke horribly" amid the overall selloff the week of Feb. 26, said Woody Dorsey, president of Market Semiotics, in an interview on TheStreet.com TV. After falling approximately 12% from its peak on Feb. 20 through March 5, the Amex Broker/Dealer Index has since rebounded by 3.9%.

"They'll probably try to rally those areas a little more" in the coming week, says Dorsey, who nonetheless believes any near-term advance should be sold.

As for the particulars, Goldman Sachs is expected to report a slight year-over-year earnings drop and revenue growth of just 3.5% when it reports fourth-quarter results on Tuesday, which may explain why it fell more (down by 14%) than the Broker/Dealer Index during the recent selloff.

Wall Street expects Lehman, which reports Wednesday, to post year-over-year earnings growth of 6.5% and revenue growth of 11.4%. Bear Stearns is expected to show 7.3% profit growth and 13.7% higher revenue when it reports Thursday.