U.S. stock futures are lower this morning, after the drop in Asian and European markets, due to worse-than-expected Chinese trade data. Futures on the Dow Jones Industrial Average dropped 47 points to 12,127.00 and futures on the S&P 500 stock index fell 7 points to 1,308.40. Nasdaq 100 futures dropped 15 points to 2,295.50.

Overseas, negative sentiment ruled the European markets today. While STOXX Europe 600 Index has dropped 0.69%, London's FTSE 100 Index moved down 1.10%.

Analyst Upgrades

• Research In Motion (RIMM) to buy from sell and Gap (GPS) to hold from sell at Citigroup.
• Archer Daniels (ADM) and Airgas (ARG) to buy from hold at Jefferies.
• NCR Corp. (NCR) to conviction buy from neutral at Goldman.
• Valero Energy (VLO) to top pick from sector perform and Western Refining (WNR) to outperform from underperform at RBC Capital.
• Fred's (FRED) to overweight from neutral at JP Morgan.
• Marsh & McLennan (MMC), Willis Group (WSH) and Brown & Brown (BRO) to equal weight from underweight at Barclays.
• Host Hotels (HST) to outperform from neutral at RW Baird.
• La-Z-Boy (LZB) to strong buy from market perform at Raymond James.

Analyst Upgrades

• Valero Energy (VLO) to outperform from perform at Oppenheimer.
• Changyou.com (CYOU) to overweight from equal weight at Morgan Stanley.
• Albermarle (ALB) to overweight from neutral at JPMorgan.
• ICU Medical (ICUI) to buy from neutral at Roth Capital.
• Check Point (CHKP) to outperform from market perform at Bernstein.
• FMC Corporation (FMC) to buy from neutral at BofA/Merrill.
• Rangold Resources (GOLD) to neutral from sell at Goldman.
• Global Cash Access (GCA) to buy from hold at Duncan-Williams.

Independent refiner Valero Energy (VLO), first discussed here on April 20, 2009 at a price of $20.08, has rebounded after coming very close to the $13 sell/stop loss.

As expected, refinery margins -- which were squeezed during 2008-2009, due to the loss of more than 8 million jobs from the U.S. economy (many of those being vehicle owners) -- continue to recover. Further, the market has not worked this new reality into Valero's stock price yet.

Longer-term, even though a global refinery capacity surplus is likely to continue through at least 2013, as U.S. fuel demand increases, crack spreads should improve as end market prices rise. Also, VLO's economies of scale and lower production cost status in the heavy/sour crude refining segment will help the firm reach earnings estimates.

Bright and early this morning, Valero Energy (VLO) was singled out for a bullish volatility play. Shortly before 10 a.m., a block of 7,500 contracts traded at the ask price at VLO's September 19 call, indicating they were purchased. Simultaneously, a matching block of 7,500 contracts changed hands on the oil refiner's September 17 put, with this transaction also taking place closer to the ask price. With VLO trading at $18.08 at the time of the trade, both strikes are out of the money.

The shares of independent refiner Valero Energy (VLO), first discussed here on April 20, 2009 at a price of $20.08, continue to frustrate investors.

Refinery margins, which were squeezed during 2008-2009, due to the loss of more than 8 million jobs from the U.S. economy -- many of those being vehicle owners -- have started to recover. Even so, the market has not worked this new reality into Valero's stock price yet.

This was another day where the real closing verdict of red or black was unknown right up until the closing bell. The day looked very mixed from index to index and sector to sector. Consumer confidence came in weak again, and there is still mixed data on housing prices.

Here were today's closing bell levels:

Dow Jones 10,537.69 +12.26 (0.12%)
S&P 500 1,113.84 -1.17 (-0.10%)
Nasdaq 2,288.25 -8.18 (-0.36%)

I first discussed independent refiner Valero Energy (VLO) on April 20, 2009, at a price of $20.08, saying at the time that investors over-punished the stock due shrinking refinery margins. If felt the consternation of investors was too great, but really, it's more of a sector issue than a company issue.

Refinery margins shrunk as U.S. gasoline decreased during the 2007-2009 recession. Removing 8.4 million jobs from the workforce will tend to affect sales, even of gasoline. As we move into recovery mode, refinery margins should improve, and with it Valero's stock price.

"Valero Energy Corp. (VLO) is an $11 billion oil refining and marketing company based in San Antonio, Texas," notes technical expert Melvin Pasternak.

The editor of Double-Digit Trading adds, "If you've ever filled-up at an Ultramar, Beacon, or Diamond Shamrock station, you've helped pump up this company. The stock may return the favor if you go long on it.

"This Fortune 500 company operates 15 oil refineries throughout the United States, Canada and the Caribbean. Its refineries have a combined capacity of 2.8 million barrels per day, an amount equal to about 1% of the 400 million gallons of gas used daily in the United States.

I've upgraded independent refiner Valero Energy (VLO) to buy from the hold rating issued on November 3, 2009, at a price of $1812. Here's why:

Valero's stock chart has reversed, after holding support at the $15-$16 level. VLO was first recommended with a Buy Rating on April 20, 2009, at a price of $20.08.

For now, I'm placing a Hold on Valero Energy Corp. (NYSE: VLO) shares, first recommended on April 20, 2009 at a price of $20.08.

Valero, the largest, independent refiner in North America, continues to underperform, as a result of the decline in demand for refined products triggered by the recession.

U.S. stock futures drifted higher Tuesday morning, pointing to a somewhat flat beginning on Wall Street this morning after yet another sell-off day Monday despite a series of strong earnings releases. Investors await several economic releases due out this morning, including housing and consumer confidence, looking for direction.

Economic releases this morning include September durable goods orders at 8:30 a.m. Eastern, which is expected to have risen. At 9 a.m., the August Case-Shiller Home Price Index is due out. Prices are expected to have continued their slide. At the same time, October's Conference Board reading on consumer confidence will be released. Economists expect confidence has improved slightly.

Valero Energy (NYSE: VLO) has underperformed, but I'm nevertheless Reiterating my Buy rating for the company, first recommended on April 20, 2009 at a price of $20.08. Here's why:

True, gasoline demand has lagged due to the recession, but that trend is expected to end, as lay-offs decline with the U.S. economic recovery.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Alcatel-Lucent (NYSE: ALU) reported a surprise profit but is expected to return to losses next quarter.
• Coach Inc. (NYSE: COH) profit and revenue were in line with expectations, sending shares lower.
• Corning Inc. (NYSE: GLW) posted better-than-expected earnings but other concerns drove down shares.
• eHealth Inc. (NASDAQ: EHTH) reported solid Q2 numbers but Wall Street was not impressed.
• Goodyear Tire & Rubber Co. (NYSE: GT) posted a smaller-than-expected Q2 loss, sending shares higher.
• JAKKS Pacific Inc. (NASDAQ: JAKK) reported swinging to a Q2 net loss and revenues were flat.

TheStreet.com's Jim Cramer says the stocks seem to move in lock step despite varying degrees of success.

Oils are not equal, even though they trade together. This morning Shell (NYSE: RDS.A) (Cramer's Take) reported profits down 67%, which is 15 points more than BP (NYSE: BP) (Cramer's Take), and this matters. Conoco (NYSE: COP) (Cramer's Take) was just disastrous, down 76%, with the worse combination of bad refining and horrid natural gas numbers. Yet they are all pretty much treated equally. Meanwhile, Chevron (NYSE: CVX) (Cramer's Take) gave you a 4.6% increase in the dividend, something they hinted they could do because of the great growth of output that is hitting now. Reserves are growing.

I am hoping that these become de-ETF'd, meaning that they can trade on their own so stock-picking matters again. That's what's happening, for example, with the banks, where a different kind of reserves is distinguishing the players.