Analyst Upgrades

• InterMune (ITMN) to outperform from neutral at RW Baird.
• Huntington Bancshares (HBAN) to buy from neutral at BofA/Merill.
• Halliburton (HAL), Cloud Peak Energy (CLD), Patriot Coal (PCX) and Consol Energy (CNX) to outperform from market perform at FBR Capital.
• Post Properties (PPS) to equal weight from underweight at Barclays.
• Airgas (ARG) to overweight from neutral at Piper Jaffray.
• Hologic (HOLX) to top pick from sector perform and Sunesis Pharma (SNSS) to outperform from sector perform at RBC Capital.

The Financial Times reported on a U.S. investigation that claims that BP (BP) and Halliburton (HAL) knew that the cement used to seal the failed well was unstable.

The lawyers suing BP and Halliburton call this evidence a "game changer" and says it opens up the companies to penalties and court awards running into the billions of dollars.

The case rests on a finding by a U.S. federal panel that the cement used may have caused the fatal explosion on the Deepwater Horizon.

Halliburton (HAL) shares, closed up 0.5% Friday. On Thursday, shares sold off 8% after the National Commission said Halliburton cement at the BP's (BP) Deepwater Horizon well was unstable. Call option volume of 72K contracts compares to put volume of 69K contracts. November put option implied volatility is at 48, December and January is at 43; versus its 26-week average of 41 according to Track Data. Large option volume suggests traders positioning for larger price movement.

Intrepid Potash (IPI) closed up 4% as analysts raised their fertilizer price forecasts. November 37 calls and 40 calls are active with total call option volume of 9K contracts (2K puts). November option implied volatility is at 55, January is at 46; above its 26-week average of 44 according to Track Data. Large call volume suggests traders positioning for large price movement.

Update is by Stock Specialist Paul Foster of theflyonthewall.com

Oil-related stocks have been significantly beaten down in the wake of the BP (BP) oil spill in the Gulf of Mexico. The market could be suggesting, however, that now may be the time to jump back into this sector.

Frankly, the energy complex as a whole looks like the most compelling segment of the stock market right now, although it does come with significant risk as many traders and investors have already been burned trying to pick a bottom over the last few months.

In order to mitigate risk in this sector, investors could consider putting together their own oil-related ETF: Determine the amount of capital that you want to commit to this sector and then divide it up between a number of companies in order to reduce company specific risk. This is similar to buying an ETF such as the Oil Service HOLDRs ETF (OIH), but allows you to pick the specific component companies.

Analyst Upgrades

• Raymond James upgraded Research in Motion (RIMM) to outperform from market perform based on valuation. The firm has a $70 price target on the stock.
• Macquarie upgraded Halliburton (HAL) to outperform from neutral and has a $40 price target on the stock. The firm said recent pressure pumping activity is above their expectations and pricing has firmed.
• Canaccord upgraded Baldor Electric (BEZ) to buy from speculative buy, citing improving business trends and the upcoming mandatory transition to premium efficiency motors. The firm has a $47 price target on the stock.
• Wells Fargo upgraded Williams-Sonoma (WSM) to outperform from market perform.
• Medco Health (MHS) was upgraded to conviction buy from buy at Goldman.
• Repsol (REP) was upgraded to buy from neutral at BofA/Merrill.

During the ongoing environmental disaster caused by BP plc (BP) that is spewing thousands of barrels of oil a day into the Gulf of Mexico (only now reducing the spill rate), there have been many calls to have the federal government take over the cap and recapture effort. This is a very lame idea.

First of all, nobody has more incentive in bringing this disaster to an end then BP because no entity has suffered more financially or seen its reputation eroded faster.

Analyst Upgrades

• Bernstein upgraded Boeing (BA) to outperform from market perform, citing valuation. The firm also raised its price target to $81 from $80.
• Wells Fargo upgraded Thomas & Betts (TNB) to outperform from market perform, citing valuation and an expected recovery in North American nonresidential construction.
• RBC Capital upgraded Susquehanna (SUSQ) to outperform from sector perform and has a $14 target on the stock. The firm thinks the stock's valuation is attractive as its decline in response to the European debt crisis and financial regulatory reform has been overdone.
• Priceline.com (PCLN) was upgraded to buy from hold at KeyBanc.
• Genzyme (GENZ) was upgraded to neutral from underweight at JPMorgan.
• RightNow (RNOW) was upgraded to overweight from market weight at Thomas Weisel.

After the lunch hour Fitch downgraded Spain's credit rating to AA+ from AAA. The euro immediately sold down to $1.229. And, the stock markets in the US swiftly sold off prior to the Memorial Day weekend, leaving investors to think about the bad news for three days. A nice way to ruin the holiday.

The initial reaction to the news was that the major indexes dropped 1.2%. By 3.30 PM the DJIA had recovered most of its equilibrium and was off .5% on small volume. Spain recently said that it would miss GDP estimates for 2011, so Wall St. may have anticipated the possibility of a ratings agency decision. Long weekends after bad news can be a time of quiet panic for traders. The beer might not taste as cool as it could have.

The unofficial closing bell numbers:

Dow 10,136.63 -122.36 (-1.19%)
S&P 500 1,089.41 -13.65 (-1.24%)
Nasdaq 2,257.04 -20.64 (-0.91%)

The worst fear has occurred. Oil from the BP (BP) spill has been seen by the European Space Agency moving south into the fast-moving Loop Current -- a body of fast-flowing water coming from the Caribbean. They warn that the oil slick will reach Florida within approximately six days.

Scientists from the National Oceanic and Atmospheric Administration, the U.S. government's climate body confirmed the oil movement, but said it was a "light sheen." It could mix with the water and be hard to detect.

The stock chart of oil services company Halliburton Company (HAL) has formed a double-top, a bearish technical pattern, and could also become a bear-hug.

The stock broke below the key, 50-day moving average right about the time of the Gulf of Mexico oil spill, and has since dropped below the 200-day moving average -- the toughest moving average to break in trading.

It has been three weeks since a BP (BP) oil rig exploded and sank in the Gulf of Mexico, and still the company has not been able to stop oil from spewing into the gulf. Friday, the companies involved got a earful from President Obama.

The three companies involved in the oil spill are BP, Transocean Offshore (RIG) and Halliburton (HAL).

Analyst Upgrades

• FBR Capital upgraded Halliburton (HAL) to outperform from market perform as it sees less headline risk from the Gulf of Mexico spill following Wednesday's House Energy and Commerce Committee hearing. The firm upped its target for shares to $44 from $35.
• FBR Capital also upgraded Morgan Stanley (MS) to outperform from market perform as it views the valuation as attractive following the recent pullback in shares. The firm maintains a $35 price target for shares.
• Deutsche Bank upgraded Avnet (AVT) to buy from hold on valuation; it views the recent pullback as a buying opportunity. The firm raised its target for shares to $39 from $36.
• U.S. Steel (X) was upgraded to conviction buy from buy at Goldman.
• News Corp. (NWS) was upgraded to buy from hold at Argus.
• Sprint (S) was upgraded to outperform from market perform at Raymond James.

In the wake of the Gulf of Mexico oil crisis and mixed earnings report around the industry, there's a lot of volatility in the energy sector. That uncertainty is causing many investors to rethink the oil stocks in their portfolio.

And when it comes to oil stocks, there's no bigger player than Exxon Mobil (XOM). If you're wondering what to do with this stock, here's some help: Recent news has provided three big reasons to sell.

Analyst Upgrades

• Deutsche Bank upgraded Varian Semi (VARI) to buy from hold following the company's Q2 results and raised its target for shares to $42 from $27.
• Baird upgraded CommScope (CTV) to outperform from neutral following the Q1 report, citing improved visibility and growth. The firm raised its price target to $39 from $28.
• Needham upgraded Build-A-Bear Workshop (BBW) to strong buy from buy. The firm is more positive on the stock following the company's Q1 results and keeps a $13 price target.
• Spirit AeroSystems (SPR) was upgraded to outperform from neutral at Credit Suisse.
• Wynn Resorts (WYNN) was upgraded to neutral from underperform at Macquarie.
• UBS (UBS) was upgraded to market perform from underperform at FBR Capital.

Here are some highlights from this past week's earnings coverage on BloggingStocks:

• Amazon.com Inc. (AMZN) strong Q1 results beat earnings expectations, and yet shares sold off.
• American Express Co. (AXP) reported better-than-expected Q1 earnings, which lifted shares.
• Apple Inc. (AAPL) shares rose to a new all-time high after it said earnings surged 90% in its Q2.
• Coca-Cola Co. (KO) beat Q1 earnings estimates but weaker-than-expected revenue sent shares lower.
• eBay Inc. (EBAY) shares sold off after Q1 earnings were in line with expectations and guidance was weak.