Goldman Sachs (GS) is purchasing India's Benchmark Asset Management Co., a big provider of exchange traded funds that was founded in 2001 and has around $700 million in assets under management. Goldman's asset management business competes with those of other leading financial institutions like Morgan Stanley (MS), JPMorgan (JPM), Credit Suisse (CS) and UBS (UBS).

Asset management constitutes about 11% of our $164 price estimate for Goldman's stock. Comparatively, bonds, currencies & commodities trading represents the largest contributor to our Goldman price estimate, at 38%.

Back in the summer of 2010 when the market was down, the gulf was full of spewing oil and investors were running away from bad news stocks shocked most notably by BP (BP) oil spill, I decided to post a contrarian story reminding readers that the fear was overblown and created a buying opportunity.

"My pal Warren" has said for years that we should buy on fear and sell on greed. The toxic stock portfolio was a result of this sentiment.

This is the fourth update to my ranting eight months ago that acquiring six of the most hated, and most highly traded stocks with constant negative headlines would outperform the overall market. The theory has born fruit as the toxic stocks are ahead and the difference is increasing over time.

Analyst Upgrades

• Intel (INTC), ON Semiconductor (ONNN), Lattice Semiconductor (LSCC), Fairchild Semiconductor (FSC), STMicroelectronics (STM) and Altera (ALTR) to outperform from neutral at RW Baird.
• Capital One (COF) to overweight from equal weight at Morgan Stanley.
• Dollar Tree (DLTR) to buy from neutral at Goldman.
• Foot Locker (FL) to buy from neutral at Sterne Agee.
• Progressive (PGR) to buy from neutral at BofA/Merrill.
• Flow International (FLOW) to buy from neutral at Roth Capital.
• Signature Bank (SBNY) to buy from hold at Jefferies.
• HiSoft Technology (HSFT) to buy from neutral at UBS.

Goldman Sachs Group, Inc. (GS) is recently down 1% due to Rajat Gupta (who served on the boards of Goldman Sachs and Procter & Gamble (PG) both), having been charged by the SEC in an insider trading scheme.

GS March 155 and 160 puts were active. March and July put option implied volatility of 27 is near its 26-week average of 29 according to Track Data. Large put volume suggests traders hedging for downside price movement.

Staples, Inc. (SPLS) March call option implied volatility is at 37, June is at 29 according to Track Data, compared to its 26-week average of 28, suggesting larger near-term movement into Q4 results on March 2.

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

Investors have been trying to guess how the Goldman Sachs (GS) business model will morph, especially as the firm moves away from proprietary trading. Interestingly enough, it looks like a part of the new strategy will be a focus on venture capital deals. Of course, the standout transaction was the investment in Facebook.

But there is another interesting one, which was announced Wednesday: a $70 million minority stake in AppSense.

Analyst Upgrades

• Micron (MU) to buy from neutral at UBS.
• Baker Hughes (BHI) to outperform from market perform at BMO Capital.
• PDL BioPharma (PDLI) to outperform from sector perform at RBC Capital.
• Fluor (FLR) and Rush Enterprises (RUSHA) to buy from neutral at BofA/Merrill.
• Camden Property (CPT) to outperform from neutral at Macquarie.
• Pinnacle Financial (PNFP) to buy from hold at Wunderlich.
• Linear Technology (LLTC) to neutral from reduce at Nomura.
• Hologic (HOLX) and Illumina (ILMN) to buy from hold at Citigroup.
• F5 Networks (FFIV) to buy from neutral at Gleacher.

Bank earnings are coming in mixed. A few days ago, JPMorgan Chase (JPM) reported its profit was up 47%. Then, Goldman Sachs (GS) reported earnings were down 52%. And on Wednesday, we got a stellar performance by Morgan Stanley (MS).

The Wall Street Journal reports that Morgan Stanley's profits were up 35% to $867 million, up from $460 million a year ago. Earnings jumped to 41 cents per share from 29 cents per share. Net revenue jumped 14% to $7.81 billion. Analysts at Thomson Reuters had forecast earnings of 35 cents a share on $7.35 billion.

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%)

Even the big boys have a "bad hair day." Goldman Sachs (GS) fourth-quarter profit fell 52% year over year.The Wall Street Journal (subscription required) reports that Goldman posted a profit of $2.39 billion, down from $4.95 billion a year ago. After preferred dividends, profit fell to $3.79 per share from $8.20 a year ago. Revenue dropped 10% to $8.64 billion. Analysts polled by Thomson Reuters had forecast earnings of $3.76 a share on $9 billion in revenue.

Other highlights of the report included:

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%.

A key to the success of Goldman Sachs (GS) has been its ability to anticipate major trends. For example, it did this during the 1980s by providing protection against hostile takeovers. Of course, then there was the move to proprietary trading.

However, in light of the Obama regulations, Goldman has had to make another major shift. In fact, it looks like the firm is going back to its roots of providing top-notch advice on public offerings and M&A.

The earnings season ramps up this week. Analysts polled by Thomson Reuters foresee strong reports from such big names as Apple (AAPL), eBay (EBAY), IBM (IBM), General Electric (GE), Google (GOOG), Schlumberger (SLB) and Southwest Airlines (LUV). And fast on the heels of last week's big earnings beat from JPMorgan Chase (JPM), there will be plenty more results from the financial sector to peruse this week.

Among the financials expected to post double-digit earnings growth this week are Capital One Financial (COF), Morgan Stanley (MS), SLM Corp. (SLM) and U.S. Bancorp (USB), but the week's biggest earnings winner may be Wells Fargo (WFC).

Analyst Upgrades

• NYSE Euronex (NYX) to conviction buy from neutral at Goldman.
• General Dynamics (GD) to buy from hold at Citigroup.
• Deere (DE), Parker-Hannifin (PH) and ExlService (EXLS) to overweight from neutral at JPMorgan.
• Aflac (AFL) to outperform from market perform at FBR Capital.
• Wynn Resorts (WYNN) to buy from neutral at Janney Capital.
• Amdocs (DOX) to buy from neutral at UBS.
• Juniper (JNPR) to buy from hold at ThinkEquity.
• Rudolph Tech (RTEC) and KLA-Tencor (KLAC) to perform from underperform at Oppenheimer.
• Hershey (HSY) and Pinnacle Entertainment (PNK) to outperform from market perform at Wells Fargo.
• Spirit AeroSystems (SPR) to equal weight from underweight at Morgan Stanley.
• Micron (MU) to outperform from neutral at RW Baird.

Analyst Upgrades

• Verizon (VZ), FEMSA (FMX), Vornado (VNO), Duke Realty (DRE) and AvalonBay (AVB) to buy from neutral, as well as Carnival (CCL) to conviction buy from buy, at Goldman.
• Symantec (SYMC) to buy from hold at Citigroup.
• Copano Energy (CPNO), DCP Midstream (DPM) and Inergy (NRGY) to overweight from equal weight at Morgan Stanley.
• SYNNEX (SNX) to strong buy from buy at Needham.
• Eli Lilly (LLY) to hold from sell at Hapoalim.
• World Wrestling (WWE) to buy from neutral at Roth Capital.

U.S. stock futures are higher this morning as investors await the Federal Reserve's report on present economic conditions. Portuguese government debt sold bonds worth €1.25 billion ($1.62 billion) in an auction. Futures on the Dow Jones Industrial Average surged 56 points to 11,672.00 and S&P 500 futures gained 6.90 points to 1,277.30. Nasdaq 100 futures rose 11.75 points to 2,297.25.

U.S. stocks closed higher yesterday, with the blue-chip Dow index gaining 34.43 points, or 0.30%.

U.S. data on December import prices will be released at 8:30 a.m. ET. The Fed is scheduled to release its Beige Book on present economic conditions at 2 p.m. ET.