Analyst Upgrades

• Goodrich (GR) to overweight from neutral at JPMorgan.
• Ford (F) to neutral from underperform and CenterPoint Energy (CNP) to outperform from neutral at Credit Suisse.
• Dollar Financial (DLLR) and Edwards Lifesciences (EW) to buy from hold at Jefferies.
• Alterra Capital (ALTE) to buy from hold at Deutsche Bank.
• Cheesecake Factory (CAKE) and P.F. Chang's (PFCB) to buy from neutral, as well as SunTrust (STI) to neutral from sell, at Janney Capital.
• Arch Capital (ACGL), Axis Capital (AXS), PartnerRe (PRE), Everest Re (RE) and Transatlantic (TRH) to buy from hold, as well as W. R. Berkley (WRB) to hold from sell, at Citigroup.
• Optimer Pharm (OPTR) to buy from neutral at BofA/Merrill.

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

• Exxon Mobil (XOM) and BB&T (BBT) to outperform from perform at Oppenheimer.
• D.R. Horton (DHI) upgraded to outperform from market perform at Wells Fargo.
• Meritage Homes (MTH), Old Dominion Freight (ODFL) and Heartland Payment (HPY) to outperform from market perform at Wells Fargo.
• Toll Brothers (TOL) to overweight from equal weight at Barclays.
• Hershey (HSY) to buy from neutral at Janney Capital.
• UnitedHealth (UNH), Cigna (CI) and Allscripts (MDRX) to buy from hold at Deutsche Bank.
• Nationwide Health (NHP) to outperform from market perform at JMP Securities.
• Reynolds American (RAI) to buy from neutral at UBS.
• Adtran (ADTN), PG&E (PCG) and Wisconsin Energy (WEC) to overweight from equal weight at Morgan Stanley.

Analyst Upgrades

• Polo Ralph Lauren (RL) to buy from hold at Citigroup.
• Qualcomm (QCOM) to buy from neutral at Roth Capital.
• Walgreen (WAG) to conviction buy from neutral at Goldman.
• Rockwell (ROK) to outperform from neutral at Credit Suisse.
• Carnival (CCL) to buy from hold at Deutsche Bank.
• SunTrust (STI) and TD Bank (TD) to outperform from market perform at Keefe Bruyette.
• Hawaiian Electric (HE) to outperform from neutral at RW Baird.
• Essex Property Trust (ESS) to outperform from neutral at Macquarie.
• Amgen (AMGN) to neutral from underperform at BofA/Merrill.

Analyst Upgrades

• Ryder (R) to outperform from sector perform at RBC Capital.
• HCP (HCP) to outperform from neutral at RW Baird.
• Hertz Global (HTZ) to overweight from equal weight at Barclays.
• Lincoln National (LNC) to buy from neutral and T. Rowe Price (TROW) to conviction buy from neutral at Goldman.
• Protective Life (PL) and Janus Capital (JNS) to neutral from sell at Goldman.
• Newell Rubbermaid (NWL) to overweight from equal weight at Morgan Stanley.
• National Instruments (NATI) to overweight from neutral at JPMorgan.
• Team Health (TMH) to buy from hold at Deutsche Bank.

Analyst Upgrades

• Union Pacific (UNP) and Polycom (PLCM) were upgraded to outperform from market perform at Wells Fargo.
• Time Warner Cable (TWC) was upgraded to outperform from sector perform at RBC Capital.
• Cheesecake Factory (CAKE) was upgraded to neutral from underweight at JPMorgan.
• LaSalle Hotel (LHO) was upgraded to outperform from neutral at RW Baird.
• Graco (GGG) was upgraded to buy from hold at BB&T.
• Valley National (VLY) was upgraded to market perform from underperform at Keefe Bruyette.
• Credit Suisse (CS) was upgraded to hold from sell at RBS.
• U.S. Bancorp (USB) was upgraded to outperform from perform at Oppenheimer.
• Penn National (PENN) and Riverbed (RVBD) were upgraded to buy from hold at Jefferies.
• Goodrich (GR) was upgraded to outperform from neutral at Cowen.
• Amazon.com (AMZN) upgraded to buy from average at Caris.

Analyst Upgrades

• Deutsche Bank upgraded Ford (F) to buy from hold and raised its price target to $19.50 from $14.50, citing positive demand trends, sustainable market share gains and strong cash flow.
• BMO Capital upgraded MGM Resorts (MGM) to outperform from market perform with an $18 target, citing stabilizing metrics in Las Vegas.
• Deutsche Bank upgraded TRW Automotive (TRW) to buy from hold, citing better-than-expected production trends, and raised its price target for shares to $52 from $39.
• Dr. Reddy's Labs (RDY) was upgraded to buy from underperform at BofA/Merrill.
• Pulte Group (PHM) was upgraded to neutral from sell at UBS and $8.50 price target.
• Vodafone (VOD) was upgraded to buy from neutral at Nomura.

Analyst upgrades

• Wells Fargo upgraded Boeing (BA) to outperform from market perform. The firm is more confident about the company's earnings growth going forward.
• Oppenheimer upgraded H&R Block (HRB) to outperform from perform on expectations the company will improve performance in 2011. The firm has a $22 price target for shares.
• Deutsche Bank upgraded SunTrust (STI) to buy from hold to reflect valuation and expectations the company's credit will improve. The firm raised its target for shares to $34 from $29.
• Children's Place (PLCE) was upgraded to overweight from neutral at JPMorgan.
• Taubman Centers (TCO) was upgraded to neutral from sell at UBS.
• Cavium Networks (CAVM) was upgraded to outperform from neutral at Cowen.

Last week, JPMorgan Chase & Co. (JPM) led off the coming parade of earnings from the big banks when it reported better-than-expected fourth-quarter and full-year earnings, though its revenue fell short of estimates.

Plenty more earnings from the financial sector are due out this week. Analysts surveyed by Thomson Reuters anticipate fourth-quarter earnings growth from American Express Co. (AXP), Bank of New York Mellon Corp. (BK), Hudson City Bancorp Inc. (HCBK), SLM Corp. (SLM) and US Bancorp (USB).

Analyst upgrades:

• Jefferies upgraded Aruba Networks (NASDAQ: ARUN) to Buy from Hold following the company's Q3 results to reflect improved visibility. The firm raised its target price to $6.50 from $3.
• Citigroup upgraded Mosaic (NYSE: MOS) and Potash (NYSE: POT) to Buy from Hold and Agrium (NYSE: AGU) to Hold from Sell as it believes stronger grain fundamentals more than offset China contract risk. The firm raised its target on Mosaic to $72 from $48, on Potash to $145 from $83 and on Agrium to $55 from $36.
• Fulton Financial (NASDAQ: FULT) Was upgraded to Market Perform from Underperform at Keefe Bruyette.
• Rio Tinto (NYSE: RTP) was raised to Neutral from Sell at Goldman.
• Noble Corp. (NYSE: NE) was upgraded at Deutsche Bank to Buy from Hold.

I think it's fair to say that there's much trepidation about the earnings season that picks up steam this week. And for better or worse, numbers from the big financials have begun to roll in. Last week we saw profit sink for JPMorgan Chase (NYSE: JPM) and significant losses from Bank of American Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), and Deutsche Bank (NYSE: DB).

Analysts surveyed by Thomson Reuters expect Bank of New York Mellon Corp. (NYSE: BK) to be among those financials reporting fourth-quarter earnings growth this week. They anticipate that Bank of New York will post a profit of $0.70 per share, compared to $0.67 per share a year ago and $0.72 in the previous quarter. Revenue is expected come to $3.8 billion, about the same as it was a year ago. Bank of New York has fallen short of earnings estimates in two of the past five quarters, by as much as 11.1%. For the full year, analysts are looking for $2.78 per share (+5.8%) on $14.8 billion (+4.2%). The consensus recommendation of analysts is to buy BK, and the long-term EPS growth rate forecast is 10.7%. Shares are 48.7% lower than a year ago. Other financials expected to report quarterly earnings growth this week include SunTrust Banks Inc. (NYSE: STI) and M&T Bank Corp. (NYSE: MTB).

Wall Street's optimism in last week's preview about the earnings of tech stocks wasn't misplaced, as there were many more positive surprises than negative ones among the stocks we looked at. This week will bring plenty more data for investors in and watchers of the sector to mull over. Apple Inc. (NASDAQ: AAPL), AT&T Inc. (NYSE: T), and Microsoft Corp. (NASDAQ: MSFT), for example, are expected by analysts surveyed by Thomson Financial to post modest earnings gains from a year ago, to $1.11 per share (on $8.1 billion in sales), $0.72 per share (on $31.3 billion in sales), and $0.47 per share (on $14.8 billion in sales) respectively. All three of these companies ended the week closer to their 52-week lows than highs, and analysts on average consider them each a buy.

Here's a look at some of the week's biggest expected earnings gainers and decliners in the sector:

• Baidu.com Inc. (NASDAQ: BIDU): $1.25 per share (+44.0%) on revenues of $134.7 million (+103.2%)
• Broadcom Corp. (NASDAQ: BRCM): $0.44 per share (+38.6%) on revenues of $1.3 billion (+33.8%)
• QLogic Corp. (NASDAQ: QLGC): $0.31 per share (+29.0%) on revenues of $170.0 million (+21.2%)
• FLIR Systems Inc. (NASDAQ: FLIR): $0.32 per share (+28.1%) on revenues of $275.2 million (+44.0%)
• Juniper Networks Inc. (NASDAQ: JNPR): $0.30 per share (+26.7%) on revenues of $927.4 million (+26.2%)
• Waters Corp. (NYSE: WAT): $0.75 per share (+17.3%) on revenues of $391.6 million (+11.1%)
• Flextronics International Ltd. (NASDAQ: FLEX): $0.29 per share (+17.2%) on revenues of $8.7 billion (+57.3%)
• EMC Corp. (NYSE: EMC): $0.19 per share (+10.5%) on revenues of $3.7 billion (+12.9%)

Financials have staged an impressive rally from extremely oversold levels," says Kelley Wright, editor of the top-rated IQ Trends, which focuses on high quality, blue chip, dividend-paying stocks. Here's his top long-term buys among banks.

"It is increasingly evident that the banking sector is dividing into two distinct camps; the have's and the have not's. The 'have's' are:

Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC) among the big cap area;
SunTrust (NYSE: STI) and BB&T Corp. (NYSE: BBT) in the larger regional banking sector;
Bank of Hawaii (NYSE: BOH) and Southwest Bancorp (NASDAQ: OKSB) in the smaller cap area.

"The impressive rally to date notwithstanding, it still remains to be seen whether another retracement will develop should crude oil, gold and other commodities reverse course.

"A strong rally in these sectors could send the market down again. While Mr. Market can do whatever he pleases, it is highly unusual for stocks to bottom in the summer.

"It would not be imprudent to see what September and October have to offer before anyone begins to talk seriously about the bottom. For investors with an appetite for the financials, however, we would suggest dusting off that old tried and true tactic of dollar cost averaging as a prudent means to establish positions."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

It's officially a trend because it's happened more than three times -- a bad financial report leads to a spike in stock prices. (I posted here and here about this phenomenon with Citigroup (NYSE: C) and Bank of America (NYSE: BAC) respectively). Now, the New York Times reports that five banks lost billions, or saw their profits plunge, but their stock prices rose an average of 12.9% in the wake of those reports.

Why? The conventional wisdom suggests that investors expected them to do much worse and were pleasantly surprised. And this phenomenon is not confined to banks -- this morning, Yahoo (NASDAQ: YHOO), which reported a penny less profit per share than the 10 cents analysts had expected, is up 3% in premarket, reportedly because it did not lower its guidance.

I am not convinced by conventional wisdom about why these stocks are up. My hunch is that there were many traders who sold short the stocks of these companies because they expected them to do worse than they actually did. When reported results beat expectations, investors bought the stocks, perhaps due to bottom fishing. These buyers caused the stocks to rise enough to trigger margin calls for those who were short. The shorts bought to satisfy those margin requirements, causing a buying panic. I wish I had data to test this hypothesis.

SunTrust Banks (NYSE: STI) shares are trading higher today after data from the Conference Board showed that the US economy may be starting to right itself. This morning's Leading Indicators report indicated a 0.1% rise for April, after March showed a positive figure last month. This data is giving investors the courage to jump back into the stock market and particularly stocks that were hurt in the mortgage mess like STI. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on STI.

After hitting a one-year high of $94.18 in May of last year, the stock has steadily declined to make its one-year low of $50.14 in April. STI opened this morning at $56.64. So far today the stock has hit a low of $56.38 and a high of $5.987. As of 12:25, STI is trading at $57.27, up 1.25 (2.2%). The chart for STI looks neutral and improving while S&P gives STI a negative 2 STARS (out of 5) sell rating.

For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just five weeks as long as STI is above $50 at June expiration. SunTrust would have to fall by more than 12% before we would start to lose money. Learn more about this type of trade here.

STI hasn't been below $50 at all in the past year and has shown support around $55 recently. This trade could be risky if other housing-specific indicators are still weak in the coming months, but even if that happens, this position could be protected by support the stock might find just above $50, where it bottomed out in the past month.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in STI.