Analyst Upgrades

• Athenahealth (ATHN), Ensco (ESV), Pride International (PDE) and Sinclair Broadcast (SBGI) to outperform from market perform at Wells Fargo.
• CIRCOR (CIR) to buy from hold at BB&T.
• Urban Outfitters (URBN) to hold from sell at Citigroup.
• Shaw Group (SHAW) to buy from neutral at UBS.
• MGM Resorts (MGM) and Boyd Gaming (BYD) to buy from neutral, as well as Intrepid Potash (IPI) to neutral from underperform, at BofA/Merrill.
• Carlisle (CSL) to buy from neutral at SunTrust.

I first wrote about International Business Machines (IBM) in February 2009 at a price of $91.51, and the stock continues to power higher -- clearing psychological resistance at $150. Now may be a good time to consider taking some profits.

However, those investors who can tolerate the risk can maintain their full position to go for a bigger gain. IBM's shares will likely trade above $180 by the end of 2011. If Big Blue approaches $195 in 2011, that would be another good to time to consider taking some profits.

If you think the economic recovery is just beginning, then these three stocks will benefit. They've just released their earnings so you can see how they've fared even in these tough times. They all share positive attributes: plenty of cash, growing sales and earnings, and a dividend.

General Electric (GE): This stock has been a frustration for years. It cut the dividend. The price went from $38 a share to $8 from 2008 to 2009. Now it's coming back. The latest quarterly and annual reports for 2010 confirm the company's finally seeing better demand for most of its products and services.

GE mirrors the economy because it's in so many different parts of it. Here are only some of its offerings: jet engines, light bulbs, credit, mortgage finance, appliances, power plants, locomotives, electric distribution and control equipment, generators and turbines, real estate, commercial finance, aircraft leasing, NBC Universal, health care and several more. When the economy does well, so does GE.

Today was a strange day marked by selling in technology and an almost gain in the DJIA. Many key technology stocks sold off as currencies weighed. Much of the media coverage surrounded President Hu's visit from China in D.C. today. Here were today's closing bell levels:

Dow Jones 11,825.29 -12.64 (-0.11%)
S&P 500 1,281.92 -13.10 (-1.01%)
Nasdaq 2,725.36 -40.49 (-1.46%)

U.S. stock index futures are slightly lower this morning following a strong earnings report from Apple (AAPL) Tuesday after the closing bell. Investors are awaiting results from Goldman Sachs Group Inc (GS). Futures on the Dow Jones Industrial Average dropped 3 points to 11,808.00, while S&P 500 futures declined 2.20 points to 1,292.50. Nasdaq 100 futures fell 0.75 point to 2,330.00.

U.S. stocks closed higher yesterday after better-than-expected manufacturing data. The Dow Jones Industrial Average gained 0.43%, while the S&P 500 rose 0.14%. The Nasdaq 100 moved up 0.38%.

International Business Machines Corp. (IBM) issued its Q4 report after the bell today. At the time of this writing, shares were up 2.4% to $154.25 on the news in the extended-hours session. So, is IBM a buy at this point? After all, that quote means that the stock has now gone beyond the new 52-week high of $151.47 that was set earlier in the intraday session.

You know, buying high can be scary and ill-advised. Still, I like IBM's prospects. According to the Associated Press, earnings of $4.24 per share went beyond the overall prediction by sixteen pennies. Net sales also impressed.

International Business Machines (IBM) will be reporting results for the fourth quarter on Tuesday, January 18, after the bell. How is the stock looking going into the numbers?

I'm writing this before Tuesday's bell, so I'm waiting to see how that session goes, but as of this writing, I can tell you that it appears as if Wall Street is pretty excited about the upcoming numbers. How excited? Well, we're talking 52-week-high excited, my friends. On Friday, the shares closed at a quote of $150, a new top point for the year.

Economies go in cycles. They push to their breaking points, then move in the opposite direction. We saw it clearly in the '90s when there was no end to up (except there was and we abruptly hit it in 2000). In 2008, it felt like there was no end to down. But we now know there is. Things are picking up, and there are numbers to prove it.

Don't be the last to figure out we're in an economic recovery. Sitting on the sidelines, waiting for one more chance to buy a stock at the bargain price you saw in March of 2009 isn't going to happen. Times have changed. The U.S. economy is on the mend.

The Chicago Board Options Exchange (CBOE) announced that for the first time it will apply its CBOE Volatility Index (VIX) methodology to options on individual stocks when it begins publishing volatility values on five highly active equities on Friday, Jan. 7.

CBOE will calculate values for Apple (ticker symbol: VXAPL), Amazon (ticker symbol: VXAZN), IBM (ticker symbol: VXIBM), Google (ticker symbol: VXGOG), and Goldman Sachs (ticker symbol: VXGS).

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.

Nobody knows what the future holds. But there are a few things shaping up that suggest certain things will most likely happen. Here are some of the major ones.

Interest Rates: Low at the beginning of the year, then headed higher for a long time. If you have an adjustable rate mortgage and you're still paying it, it's the perfect time to get it refinanced, if you can qualify. Interest rates are definitely going up; it's just a matter of when. As long as the Fed is pumping money in (QE2 is targeted with $800 billion .... with the possibility of more behind it), rates will stay low, unless investors think inflation will get way out of hand. Then rates will go higher no matter what the Fed does as investors sell longer term bonds to beat the coming inflation. Initially, rising interest rates will be bullish as they are a precursor to a healthy economy. But that bull will morph and become a bear when rates start jumping as the Fed tries to get ahead of inflation. Tricky business. Investors will do well to have floating rate assets and fixed rate liabilities.

Plans. They're something other people make, right? And what's the use of a plan when the stock market is so volatile? You can watch a stock take years to rise well above where you bought it, only to see all that gain lost in a matter of hours. Plans. Who needs them? You do. Especially you.

Investors need plans and discipline more than ever. It's been a tough few years. No one knows how long this recession will last, but having a plan that is almost (nothing is absolute in investing) bulletproof will help you get through the roughest days, weeks, months, even years of turmoil. Here's where you start:

This past weekend the European Union cast a bailout plan for Ireland that should be noted as another highlight reflecting not just the problems in Ireland but more broadly the lackluster potential for anything but a meager increase in the world economy over the next few years. Some will be affected more the others and today Ireland just happens to be the attention grabber, with passions running deep:

• "This is not a rescue plan. It is the longest ransom note in history: Do what we tell you and you may, in time, get your country back," said Fintan O'Toole, a commentator and author who led a weekend protest by labor-union activists in central Dublin against the imminent bailout. He called the average interest rate being demanded "viciously extortionate."

Despite all the government printing presses running overtime, inflation does not appear to be on the horizon. Wages are going nowhere, rents are stagnant, and pricing power is modest except for the very few. The biggest inflationary pressure has come from oil prices over the past decade, and that is still the most likely commodity to wreak havoc going forward if there is inflationary pressure. Though the clouds over the global economy are thick, there still will be rays of sunshine in the stock market.

Investors.com reports on a new, faster process in chip production from IBM. The process is called Cu-32 and is 15% faster than IBM's current process. The Cu stands for copper and the 32 stands for nanometers in width. IBM's current process is 44 nanometers in width.

The Cu-32 is used to make ASICs, or application-specific integrated circuits. Circuit makers will be able to mix and match what features they want and have IBM make that ASIC.

International Business Machines (IBM), which I first wrote about in February 2009 at a price of $91.51, is in an uptrend, and there's no mystery why.

IBM's demonstrated business model should generate a 2010 revenue increase of 4% to 5% amid the U.S. and global economic recoveries, and a 5% to 7% revenue increase in 2011.

Further, just about everything is running in IBM's favor right now: service division revenue is increasing at an adequate rate, along with its order backlog, and software division revenue has been boosted by recent acquisitions. The service order backlog totaled about $134 billion as of September 2010. Further, market share gains in emerging markets will enhance profitability abroad.

Research In Motion (RIMM) closed up 5.9% to $54.76. Total call option volume of 219,000 contracts (107,000 puts). November call option implied volatility is at 43, December is at 47, and January is at 45, versus its 26-week average of 43, according to Track Data.

IBM (IBM) closed up 0.60% to $140.67 on the board of directors authorizing $10 billion in additional funds for use in the company's stock repurchase program. Total call option volume of 32,000 contracts (19,000 puts). November call option implied volatility is at 17, December is at 19, January is at 21, versus its 26-week average of 22, according to Track Data. Large call volume suggests traders positioning for upside price movement.

Options Update is by Stock Specialist Paul Foster of theflyonthewall.com.