Brokers begin reporting week of March 12th

Lehman kicks off the brokerage reports Wednesday morning, March 14th and of the three brokerage stocks that we own for clients, Lehman looks the worst technically. If I were to rank our brokerage holdings from the best to worst in terms of how each respective stock looks from a technical analysis perspective, here is how the brokers would fall out:

1.) Goldman Sachs (GS) - in this latest drop from its high of $220 to the high $190's, Goldman never hit its 200-day exponential moving average and is still well above its 50 week moving average around $175. Volume was heavy on the way down but the stock doesn't appear to be under heavy distribution;

2.) Charles Schwab (SCHW) is our preferred discount broker and where we custody our client assets, and also happens to be a stock we like to hold in client accounts, given Schwab's asset-gathering prowess. SCHW is bouncing off its 200-day moving average although again the stock does not appear to be under heavy distribution, and given that it is a discount broker, and thus it doesn't bet its balance sheet on proprietary trading strategies as do the white-shoe firms like Goldman. Lehman, Bear, Morgan and Merrill, revenues and earnings are much less volatile than the major investment banks.

3.) Lehman Brothers - the stock fell on heavy volume beginning February 27th, and saw heavy distribution as it fell below its 200-day moving average, and this after it broke out of a one-year consolidation trading between $75 - $80 per share in January 2007. LEH is currently testing its 50 week moving average near $73 per share.

long GS, LEH, SCHW