Analyst Upgrades

• BB&T (BBT) and Aflac (AFL) to buy from hold at Deutsche Bank.
• Kodiak Oil & Gas (KOG) to outperform from neutral at RW Baird.
• Zhongpin (HOGS) to neutral from reduce at Global Hunter.
• Marathon Oil (MRO), Noble Energy (NBL) and Manulife Financial (MFC) to buy from neutral at UBS.
• Carrizo Oil & Gas (CRZO) to buy from hold at Canaccord.
• Comerica (CMA) to buy from neutral at Rochdale.

Institutional investors (IIs) have made up for lost time with Marathon Oil Corp. (MRO), first discussed here on April 20, 2009, at a price of $28.55. The shares have surged higher this winter, rising from about $35 to about $49.

Hence, it goes without saying that now would be a good time to consider taking some profits off the table with MRO, if you're in at/near $28.55.

However, those investors who can tolerate the risk can maintain their full position with MRO and go for an even bigger gain.

Friday's fourth-quarter GDP numbers offered more evidence that the economy is picking up steam, but one of the biggest obstacles to the recovery remains the stubbornly high unemployment rate. We'll find out whether there's been any movement on that front when employment data for January comes out this week. The Challenger Job-Cut report and ADP employment data are due Wednesday, and the government's unemployment rate on Friday. Another mild increase in jobs is expected, in line with the three-month average, but not enough to significantly reduce the unemployment rate.

Also look for the ISM manufacturing and nonmanufacturing indexes this week, as well as the Chicago PMI and the New York NAPM index. And Fed Chairman Ben Bernanke will speak to the National Press Club on Thursday.

Analyst upgrades:

• Verizon (VZ) to conviction buy from buy at Goldman.
• CSX (CSX) to outperform from market perform at Wells Fargo.
• AK Steel (AKS) to overweight from neutral, as well as Lorillard (LO) and Fifth Third Bancorp (FITB) to neutral from underweight, at JPMorgan.
• Marathon Oil (MRO) to overweight from equal weight at Morgan Stanley.
• Corning (GLW) to buy from outperform at CLSA.
• Quest Diagnostics (DGX) to buy from hold at Jefferies and to outperform from sector perform at RBC Capital.
• Salesforce.com (CRM) to buy from neutral at Roth Capital.
• Baker Hughes (BHI) to buy from hold at Weeden and to outperform from neutral at Macquarie.
• Western Digital (WDC) and Seagate (STX) to buy from underperform at BofA/Merrill.

Marathon Oil (MRO) announced the spin out of Marathon Petroleum Corporation (MPC). Marathon intends to distribute one share of MPC for every two shares of Marathon. Overall option implied volatility of 26 is near its 26-week average of 28, according to Track Data, suggesting nondirectional price movement.

Cypress Semi (CY) closed up 4% as traders focused on February 22 and 23 calls, with total call volume of 15K contracts, compared to 7K puts. January and March option implied volatility of 38 is below its 26-week of 41, according to Track Data. Active call volume suggests traders positioning for price movement.

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

Thursday saw seasonality make for a weak jobs report, some manufacturing data came in lower than expected and the rate of wholesale inflation looks to be perking up if you include food and energy. A surprise rate hike from South Korea also took the headlines away from the E.U. and U.K. central banks keeping rates unchanged. Even Ben Bernanke being more confident and calling for 3% to 4% GDP growth in 2011 failed to bring new buyers. The DJIA was weaker than most indexes up until the end of the today.

Here are Thursday's unofficial closing bell levels:

Dow Jones 11,731.90 -23.54 (-0.20%)
S&P 500 1,283.76 -2.20 (-0.17%)
Nasdaq 2,735.29 -2.04 (-0.07%)

Top Analyst Upgrades & Downgrades

To continue to grow, many companies have little choice but to spend large amounts on acquisitions. But at a certain point, the operations get too complicated and bloated. The solution? Yes, it's to unwind the deals. Often, Wall Street will be enthusiastic. Just look at Wednesday's announcement from conglomerate ITT (ITT). On news of its plan to split into three publicly traded companies, the shares spiked 16%.

In fact, this may actually be the start of a key trend for 2011. After all, early Thursday Marathon Oil (MRO) announced that it will spin-off its refining and sales operations as a public company (the deal should be closed on June 30). In early trading, the company's shares were up about 10%.

Oil rose above $90 per barrel on Wednesday, and the average U.S. price for unleaded regular topped $3 per gallon. Moreover, with the U.S. economic recovery likely to strengthen in 2011, and will strong emerging market GDP growth gobbling up more barrels of oil, both oil and gasoline prices are likely to rise further next year.

That's good news for investors in most oil stocks, but bad news for U.S. consumers, particularly motorists. However, the view from here argues that one should not dabble in the futures market to try to hedge against rising oil prices. The price of oil is influenced by more than 10 variables, and unless you're prepared to lose up to $500 per day, you're probably going to be at a trading disadvantage.

If you're looking for a smooth ride or a vector north, you'll want to avoid the shares of Marathon Oil Corp (MRO), first discussed here on April 20, 2009, at a price of $28.55.

Marathon shares remain on the mend, but talk about fits and starts: $5 jumps higher are followed by $4 retracements south. Further, Marathon cleared clutter near $35 this fall, only to fall back.

Even so, a mild Marathon uptrend remains intact, hence the evaluation to stick with the trade.

Analyst Upgrades

• Goldman upgraded BP (BP) to buy from neutral.
• STEC (STEC) was upgraded to buy from hold at Needham.
• MCG Capital (MCGC) was upgraded to buy from hold at BB&T.
• Corporate Office (OFC) was upgraded to market perform from underperform at FBR Capital.
• Citigroup upgraded K-Sea Transportation (KSP) and Post Properties (PPS) to hold from sell.
• BofA/Merrill upgraded Embraer (ERJ) to buy from underperform.
• Wilmington Trust (WL) was upgraded to neutral from underperform at Macquarie.
• Parkway Properties (PKY) was upgraded to hold from sell at Stifel Nicolaus.

It will be a busy week. Republicans are poised to gain control of the House of Representatives and gain governorships in Tuesday's mid-term elections. Also, the Federal Reserve is expected to announce another round of quantitative easing Wednesday, following the FOMC meeting. Major retailers are scheduled to report October same-store sales Thursday, while the October unemployment rate, announced on Friday, is expected to remain at 9.6%.

Toyota's (TM) fiscal second-quarter results will be one of the highlights on the earnings front this week. After three periods of way underestimating Toyota's earnings, have the analysts surveyed by Thomson Reuters got it right this time? The stock sure could use a boost. Teva Pharmaceuticals (TEVA) is in a similar situation; i.e., high expectations for this week's quarterly results but a stock in need of a boost. Marathon (MRO) and Starbucks (SBUX) are also expected to post strong earnings growth this week, but both stocks are riding high.

Analyst Upgrades

• Wells Fargo upgraded PG&E (PCG) to outperform from market perform and raised its range for shares to $50 to $52 from $44 to $46, citing the proposed settlement in the company's 2011 General Rate Case.
• Jefferies upgraded Huntsman (HUN) to buy from hold and raised its price target for shares to $17 from $12, citing valuation and the likelihood for favorable earnings revisions.
• RBC Capital upgraded Jack in the Box (JACK) to outperform from sector perform with a $28 target, citing checks showing improved fast food sales in recent months and easy comps.
• Sonic (SONC) was upgraded to outperform from sector perform at RBC Capital and $12 price target.
• Synaptics (SYNA) was upgraded to overweight from neutral at JPMorgan and $40 price target.
• Excel Maritime (EXM) was upgraded to buy from hold at Cantor and raised its price target to $7 from $5.

"We discriminate among investments primarily by their relative valuation metrics; we buy only those stocks we find undervalued relative to their own trading history, their peers or that of the market in general," says value investor John Buckingham.

The editor of The Prudent Speculator explains, "Two such buys are Marathon Oil (MRO) and Tsakos Energy Navigation (TNP).

"Both stocks could be chosen as part of the foundation of a portfolio for new investors or for those seeking to diversify their holdings.

The shares of Marathon Oil Corp (MRO), first discussed here on April 20, 2009 at a price of $28.55, remain on-the-mend.

Marathon reported June quarter earnings per share of $1.11, excluding 11 cents in charges, and well above the 81-cent First Call estimate.

The June quarter performance was enough to push Marathon's shares slightly higher, and the stock's technical indicators now are more-closely aligned with the company's fundamental indicators -- thus averting a closed position, for now.

Marathon Oil (MRO) was the target of a neutral-to-bullish credit spread on Thursday. Shortly after 2 p.m. Eastern, the trader sold to open 1,610 contracts of the stock's August 32 put, and simultaneously bought to open an equivalent number of MRO's August 30 put.

This strategy, known as a short put spread, is essentially a bet that MRO will remain at or above $32 through August expiration. In other words, the trader's main goal is for MRO to remain above the sold put strike, which is the crux of this spread. The purchased put is used only to limit the speculator's risk in the event of an unexpected slide by the underlying equity.