Analyst upgrades:

• Canaccord upgraded Rio Tinto (NYSE: RTP) to Buy from Hold citing valuation following the severe price decline following BHP Billiton's (NYSE: BHP) dropped bid.
• UBS upgraded Itron (NASDAQ: ITRI) to Buy from Neutral citing valuation and defensive business mix.
• Jefferies upgraded shares of HealthSouth (NYSE: HLS) to Buy from Hold on valuation and maintains a $13.50 target.
• Melco PBL Entertainment (NASDAQ: MPEL) was raised to buy from Neutral at Goldman.
• PG&E (NYSE: PCG) was upgraded at Merrill Lynch to Buy from Neutral.
• HSBC Holdings (NYSE: HBC) was upgraded to Buy from Neutral at UBS.

Analyst downgrades:

TheStreet.com's Jim Cramer says all that money has to go somewhere, and this is a likely destination.

Clash of the ideals! Oil's down, and what can you buy when there's so much bad bank news? What can you buy when Wachovia (NYSE: WB) (Cramer's Take) is boosting reserves and Morgan Stanley (NYSE: MS)) (Cramer's Take) is still being pursued by authorities and JPMorgan (NYSE: JPM) (Cramer's Take) says July stunk and UBS (NYSE: UBS) (Cramer's Take) is so tarnished that you can't believe it was once the most conservative blue chip out there.

The answer is tech, of course!

Wait a second. Would anyone mind if we actually had a reason to buy tech beyond the Kindle, the device that made Citigroup gaga about Amazon (NASDAQ: AMZN) (Cramer's Take) -- not that you needed a device to do that.

Sure, we have pre-seasonality. Remember, you are supposed to buy tech at the end of the summer, not that anyone waits that long.

But what we really have is that quant thinking that Doug rails about so correctly: the CDO of stocks! We take a little bad tech, the lowest-end stuff like RF Micro (NASDAQ: RFMD) (Cramer's Take) and Parametric (NASDAQ: PMTC) (Cramer's Take); mix in some mid-tech, stuff like National Semi (NYSE: NSM) (Cramer's Take) and Analog Devices (NYSE: ADI) (Cramer's Take); then throw in Intel (NASDAQ: INTC) (Cramer's Take), Microsoft (NASDAQ: MSFT) (Cramer's Take), Google (NASDAQ: GOOG) (Cramer's Take), Amazon and Adobe (NASDAQ: ABDE) (Cramer's Take) -- yes, Adobe; then split them into tranches, slice 'em up, and offer a derivative on them for those who want leverage and we have, well, a tech rally!

MOST NOTEWORTHY: J. Sainsbury, Orthofix and Salary.com were today's noteworthy downgrades:

• Merrill Lynch downgraded J. Sainsbury (Other OTC:JSAIY) to Sell from Neutral following the company's quarterly results; Deutsche Bank downgraded shares to Sell from Hold as they believe the company's results show it has lost momentum.
  
• ThinkPanmure downgraded Orthofix (NASDAQ:OFIX) to Source of Funds from Accumulate citing the loss of Osteocel, which will impact growth.
  
• Wachovia cut Salary.com (NASDAQ:SLRY) to Market Perform from Outperform citing concerns that FY09 will be a challenging given significant increases in investment for sales and marketing.

OTHER DOWNGRADES:

• UBS cut Knight Transportation (NYSE:KNX) to Neutral from Buy.
  
• HSBC downgraded StatoilHydro (NYSE:STO) to Neutral from Overweight.
  
• Merrill lowered National Semi (NYSE:NSM) to Neutral from Buy.

MOST NOTEWORTHY: National Semi, Cintas and J.C. Penney were today's noteworthy upgrades:

• JMP Securities upgraded National Semi (NYSE:NSM) to Outperform from Market Perform citing strong Q2 results, as they expect growth to continue driven by continued success in high-end analog and power management products.
  
• Baird raised its rating on Cintas (NASDAQ:CTAS) to Outperform from Market Perform based on analysis that indicates the cyclical inflection point in the sector's stocks is near with U.S. employment growth is likely to bottom within 6-12 months and expectations that the Project One Team initiative is poised to surprise in early 2008.
  
• Lehman upgraded shares of J.C. Penney (NYSE:JCP) to Overweight from Equal Weight, as they believe the company is well-positioned to gain market share in the current environment.

OTHER UPGRADES:

• Royal Bank of Scotland (RBS) was upgraded to Overweight from Neutral at HSBC.
  
• Goldman raised CA, Inc (CA) to Buy from Neutral.
  
• Jefferies upgraded SunPower (SPWR) to Buy from Hold.

MOST NOTEWORTHY: NutriSystem, Endo Pharmaceuticals, Corporate Express NV, Aventine Renewable Energy Holdings and BioFuel Energy were today's noteworthy downgrades:

• NutriSystem (NASDAQ: NTRI) was downgraded to Hold from Buy at Lazard and to Buy from Strong Buy at Broadpoint following its lowered Q3 guidance.
  
• Jefferies downgraded shares of Endo Pharmaceuticals (NASDAQ: ENDP) to Hold from Buy after Impax Laboratories (NASDAQ: IPXL) filed a Paragraph IV challenge against Opana ER yesterday to reflect the potential for a generic version of Opana ER arriving as early as 2010 and the possibility of a similar threat against Lidoderm.
  
• Corporate Express (NYSE: CXP) was downgraded to Hold from Buy at ING, as they believe the new CEO's long-term targets are overly ambitious.
  
• JP Morgan downgraded Aventine Renewable (NYSE: AVR) and BioFuel Energy (NASDAQ: BIOF) to Neutral from Overweight, citing weaker fundamentals in ethanol pricing.

OTHER DOWNGRADES:

• JP Morgan downgraded Charlotte Russe (NASDAQ: CHIC) and The Wet Seal (NASDAQ: WTSLA) to Neutral from Overweight.
  
• Goldman downgraded Monolithic Power Systems (NASDAQ: MPWR) and Hansen Natural (NASDAQ: HANS) to Neutral from Buy; Goldman removed National Semiconductor (NYSE: NSM) from its Conviction Buy List.

Toshiba Corporation (OTC: TOSBF), the large memory chip manufacturer, said that it has sold out of its supply of NAND flash memory. Also, there have been reports that increased handset and smartphone demand is leading to a pick up in demand for chips in general.

Micron Technology (NYSE: MU) reports results today so it will be interesting to see what they have to say and whether any of their diversification efforts are having success.

Intel Corporation (NASDAQ: INTC) recently upped its revenue guidance, National Semiconductor Corporation (NYSE: NSM) reported results in line with positive guidance and Texas Instruments Inc (NYSE: TXN) provided mid-quarter guidance with no positive surprise.

Micron is one moribund stock sitting at a low. The stock looks pretty washed-out with limited downside risk. It may be worth a look going into today's earnings release.

National Semiconductor Corporation (NYSE: NSM) reported first quarter earnings of $0.30 per share, easily beating the consensus of $0.25 per share. Sales came in at $471.5 million versus estimates of $467 million. Management is forecasting the wireless semi recovery to continue, seeing second quarter sales up 4% to 7%, hitting $490 to $504 in line with expectations.

The free cash flow machine continues as National generated return-on-invested capital -- ROIC -- of 20% for the fifth consecutive year. This has allowed the company to buyback $4 billion of stock during that time while still investing in R&D.

Incremental flow through of 70% has allowed the company to reduce its shares outstanding to 284 million from 324 million during recent buybacks. When seeking ideas in the semi space, National should remain at the top of the list.

Analog Devices Inc (NYSE: ADI), the high-end wireless chip maker, reported revenue results which slightly exceeded analysts' estimates, however, came in a little light on the bottom line. Analog, for those who do not recall, was one of the best performing U.S. stocks during the 1990s, as many of its high-end chips were in strong demand as wireless networks were constructed around the world.

However, this decade Analog has seen increased competition, particularly from Texas Instruments Incorporated (NYSE: TXN), in the high-end market which has put a damper on its previously strong results. Yesterday's results point to that again as expenses were a bit higher than consensus.

Conversely, National Semiconductor Corporation (NYSE: NSM) has turned into a superb grower in the wireless space this decade. Receiving an upgrade yesterday from Lehman Brothers as the stock has pulled back 14% the past month and a half. Lehman upped its price target to $31 from $29, and increased its rating from Equal Weight to Overweight.

As we have been blogging for the past year, National Semi is in the sweet spot of the wireless semi-space. Buy and stay with this stock as there is good money to be make here. Integrated chips is what the market wants and National provides them.

MOST NOTEWORTHY: McDonald's (MCD), Micron Tech (MU), ManPower (MAN), ASML Holding (ASML) and Wm. Wrigley Jr Co (WWY) were today's notable upgrades:

• McDonald's (NYSE: MCD) is creating shareholder value by selling 1600 under-performing restaurants and using the money for share buyback programs and dividends and was upgraded to Buy from Hold at Matrix.

• AG Edwards upgraded Micron (NYSE: MU) to Buy from Hold on the belief notebook unit growth could stay in the 25-30% YoY range over the next two quarters, while desktop growth could pick up from the 4% attained in the June quarter. Up from a low of close to $5 in February, NAND spot prices are in the $8-$9 range for an 8Gb chip over the last few weeks.

• ManPower (NYSE: MAN) was upgraded to Strong Buy from Hold at Matrix based on the growing demand for search services in Europe, Africa and North America.

• Friedman Billings upgraded shares of ASML Holding (NASDAQ: ASML) to Outperform from Market Perform and added them to their Top Picks list based on recent checks that indicate a sustainable recovery in lithography tool bookings beyond Q3.

• Bear upgraded shares of Wrigley (NYSE: WWY) to Peer Perform from Underperform citing the better-then-expected response to competitor Cadbury (CSG), UK momentum in developing markets, and likely strong performance by new gum, "5."

OTHER UPGRADES:

• Calyon raised Capital One (NYSE: COF) to Buy from Add.

• Goldman raised Darden Restaurants (NYSE: DRI) to Buy from Neutral.

• Lehman upgraded National Semiconductor (NYSE: NSM) to Overweight from Equal Weight.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Eaton Vance (EV), Dover Downs (DDE), Meruelo Maddux (MMPI) and Fifth Third Bancorp (FITB) were today's noteworthy downgrades:

• Merrill downgraded shares of Eaton Vance (NYSE: EV) to Sell from Neutral on expectations net flows will slow and pressure shares due to bank loan outflows and closed-end fund sales.

• Keybanc downgraded Dover Downs (NYSE: DDE) to Hold from Buy due to expectations of significant movement in the Maryland state legislature regarding the issue of slot machine legalization, which could pressure shares.

• Meruelo Maddux (NASDAQ: MMPI) was cut to Sell from Neutral at UBS based on tightening credit markets.

• Friedman Billings downgraded shares of Fifth Third (NASDAQ: FITB) to Underperform from Market Perform on this morning's acquisition of First Charter Corp...

OTHER DOWNGRADES:

• Alliant Techsys (NASDAQ: ATK) was cut to Market Weight from Overweight at Thomas Weisel.

• National Semi (NYSE: NSM) was removed from Goldman's Favorites Value List.

• Matrix downgraded Woodward Governor (NASDAQ: WGOV) to Hold from Buy.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Apple (AAPL), large-cap semis, and CDC Corp (CHINA) were today's noteworthy initiations:

• Apple (NASDAQ: AAPL) was initiated with a Buy rating and $160 target at Banc of America, as the firm still sees a significant amount of upside in the stock from Mac share gains, strong iPod unit growth, and the iPhone, which they believe is being underestimated.

• Caris believes investors should focus on companies with strong product cycles that are gaining market share. They resumed coverage of Intel (NASDAQ: INTC), Texas Instruments (NASDAQ: TXN) and National Semiconductor (NASDAQ: NSM) with Above Average ratings, and resumed Advanced Micro (NYSE: AMD) with a Sell rating; Caris started Intel with a $26 target, Texas Instruments with a $41 target, National Semi with a $29 target, and AMD with a $10 target.

• CDC Corp (NASDAQ: CHINA) was initiated at Piper Jaffray with an Outperform rating and $11.50 target.

OTHER INITIATIONS:

• Banc of America started shares of Hewlett-Packard (NYSE: HPQ), Sun Microsystems (NASDAQ: SUNW) and Dell (NASDAQ: DELL) with Buy ratings and a $56 target, $6.25 target and $35 target, and shares of IBM Corp (NYSE: IBM) with a Neutral rating and $125 target.

• BMO Capital started shares of NuVasive (NASDAQ: NUVA) with an Outperform rating and $33 target.

• Raymond James initiated shares of Petro-Canada (NYSE: PCZ) with an Outperform rating.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

With weak futures this morning and panic selling at the end of the trading day yesterday, it is time to start looking at buying some stock. The market is so oversold it could mean we are due for a pretty good short term rally. Stocks to consider include:

• Home Depot Inc. (NYSE: HD) -- Barron's was on target this past weekend writing that the home-improvement retailer could have considerable upside in the years ahead. The company still has a tender on the market between $39 and $44, the record day of which may have passed, but there is $10 to $12 billion in buybacks still to come.
• National Semiconductor Corporation (NYSE: NSM) -- iPhones are selling and the move to wireless is still the rage, which fits into this wireless semiconductors sweet spot. Following a strong earnings report and a huge share repurchase agreement, the stock rallied to $29.60, but it is now down below $26, essentially erasing all the gains for the good earnings. This is a good entry point.
• AES Corporation (NYSE: AES) -- The Fly blogged about this one the other day, with the stock down 15% from its recent high, and continuing to trade poorly, this stock may be worth scooping up.

We blogged about a trading opportunity in Level 3 Communications Inc (NASDAQ: LVLT) the other day, and the stock rallied from $5.00 to $5.40. For those who were nimble enough to sell into yesterday's strength, that trade worked out well. The trades listed above should also work out well as this oversold market has a short-term rebound.

We have been blogging positively about Intel Corporation (NASDAQ: INTC) since May. However, with ho-hum results reported last night and recent stock appreciation, it may be time to look elsewhere for profits in the semiconductor space.

Intel reported very solid results but not strong enough to drive the stock much higher from here. As we've been blogging since Q1 earnings release, Intel's revenue and gross margins were about to ramp higher, but from listening to last night's results that growth is going to be muted. The company expects only 6% yoy revenue growth, little improvement in gross margin and free cash flow generation which will be difficult to forecast.

The most disturbing aspect of last night's call was Intel's forecast for flat operating expenditures for 2008. This means Advanced Micro Devices Inc (NYSE: AMD) is proving a more formidable competitor and not going to disappear as it has in the past when Intel has targeted market share. This could mean little-to-no revenue growth for 2008.

Also, stock repurchased during the quarter was a measly $100 million. Not a good number. The combination of massive slowdown in share repurchase and flat operating expenditure guidance means Intel is becoming concerned about its sources and uses of cash.

I would take the profits and move elsewhere. It looks like National Semiconductor Corporation (NYSE: NSM) currently has the best growth profile in the semi space.

As the market rallies and Intel Corporation (NASDAQ: INTC) gets one upgrade after another, do not forget about National Semiconductor Corporation (NYSE: NSM).

National Semiconductor generated 62.5% gross margins in the most recent quarter, a huge number when considering the company is just coming out of a cyclical bottom. The trough gross margin in the most recent downturn was just 59%, an amazingly high number.

National Semi's ability to manage gross margins has increased its ability to generate cash during weak times and is the reason for the current $2.4 billion repurchase plan that was just announced. National Semi's market cap is just $9 billion.

Higher-end valued products are leading to higher ASPs and volume increases which translate into higher revenue, with billings up 16% and bookings up 33%. ROIC is above 20% and will be able to be maintained at that level, according to management.

National Semi's number are looking too powerful to pass up.

What is most spectacular about the buybacks announced this week is not just their size, but also that they are occurring in industries whose fundamentals are at a cyclical bottom or just beginning a cyclical upswing.

• Home Depot Inc (NYSE: HD) -- increased share buyback by $22.5 billion, roughly one-third of its market capitalization
• Expedia Inc (NASDAQ: EXPE) -- buying back 42% of its outstanding stock through a Dutch auction
• National Semiconductor Corporation (NYSE: NSM) -- last week increased its buyback to $2.5 billion, or 27% of its market cap.

TheStreet.com has an excellent chart on share buybacks announced during the last few months.

Home Depot is buying back stock while the housing construction market is still bottoming, Expedia just started reported good results earlier this year and National Semi said in its most recent conference call that the wireless semiconductor market is exiting an industry bottom.

Why is there so much cash available for these massive share buybacks? Huge returns on invested capital (ROIC) is the answer. US companies have done a great job earning their cost of capital. Even if companies do not grow revenue quickly, as has been the case with Home Depot, they generate massive free cash flow. The same can be said of Expedia and National Semi.

The massive buybacks being announced just as industry fundamentals are bottoming or beginning an upswing is a very bullish signal for these stocks.