Analyst upgrades:

• UBS upgraded Safeway (NYSE:SWY) to Buy from Neutral based on valuation.
  
• AthroCare (NASDAQ:ARTC) was raised to Neutral from Negative at Susquehanna on valuation.
• BT Group (NYSE:BT) was raised to Neutral from Underperform at Credit Suisse.
  
• Leap Wireless (NASDAQ:LEAP) was upgraded at Goldman to Buy from Neutral.
  
• China Mobile (NYSE:CHL) was upgraded to Buy from Neutral at Merrill Lynch.

Analyst downgrades:

• Jefferies downgraded shares of Albany Molecular (NASDAQ:AMRI) to Underperform from Hold on concerns regarding the company's exposure to small biopharma as their checks suggest biopharmaceutical companies that rely on the capital markets to fund operations are cutting back significantly on R&D projects. The firm lowered their target to $8 from $10.
• Baird downgraded Sirona Dental (NASDAQ:SIRO) to Neutral from Outperform and lowered their target to $15 from $21 due to lack of catalysts and better options in dental.
  
• Stephens cut Hub Group (NASDAQ:HUBG) to Equal Weight from Overweight on the expectation that weaker volumes will lead to pricing pressure. The firm lowered their target to $24 from $36.
• Teco Energy (NYSE:TE) was downgraded to Hold from Buy at KeyBanc.
  
• RF Micro Devices (NASDAQ:RFMD) was lowered to Underperform from Buy at Merrill Lynch.
  
• Energy Conversion (NASDAQ:ENER) was cut to Underweight from Equal Weight at Barclays.

Analyst upgrades:

• William Blair raised Quest Diagnostics (NYSE: DGX) to Outperform from Market Perform. The firm believes that the long-term fundamentals of the clinical laboratories sectors are still strong.
  
• UBS upgraded Massey Energy (NYSE: MEE) to Buy from Neutral on valuation.
  
• ArthroCare (NASDAQ: ARTC) was upgraded to Buy from Hold by Lazard, since the firm expects a small restatement while they believe a large restatement is priced into the shares.
• Arch Coal (NYSE: ACI) was upgraded to Buy from Neutral by UBS.
• Merrill Lynch raised Southern Peru Copper (NYSE: PCU) to Neutral from Underperform.

Analyst downgrades:

• Piper downgraded Salesforce.com (NYSE: CRM) to Neutral from Buy to reflect the company's lower than expected deferred Q2 revenue.
• Goldman Sachs removed Amylin Pharmaceutical (NASDAQ: AMLN) from its Conviction Buy List.
  

Analyst initiations:

• Aetna (NYSE: AET) was initiated with a Buy by Banc of America, which believes the company will experience industry-leading member growth.
  
• Banc of America initiated Wellpoint (NYSE: WLP) with a Buy rating, as the firm expects the shares to rebound from near trough valuations.
  
• Wachovia (NYSE: WB) was reinitiated by Friedman Billings with an Underperform rating, as the firm expects the company to incur higher credit losses than the Street expects due to its outsized exposure to residential real estate.
  
• Six Flags (NYSE: SIX) was started with an Above Average rating by Caris.

MOST NOTEWORTHY: Texas Instruments, SanDisk and Brocade were today's noteworthy downgrades:

• Merrill Lynch downgraded shares of Texas Instruments (NYSE: TXN) to Neutral from Buy after the company reported lower-than-expected Q3 results due to concerns regarding elevated inventory levels and rising raw material and labor costs. Merrill lowered their target to $27 from $32.
  
• Citigroup cut SanDisk (NASDAQ: SNDK) to Sell from Hold after the company reported a Q2 miss and offered lower-than-expected guidance. Citigroup lowered their target price to $14 from $20.
  
• JMP Securities downgraded Brocade (NASDAQ: BRCD) to Market Perform from Outperform following the company's announcement to buy Foundry Networks, Inc. (NASDAQ: FDRY) for $19.25 per share.

OTHER DOWNGRADES:

• ArthroCare (NASDAQ: ARTC) was lowered to Market Perform from Outperform at William Blair.
  
• JP Morgan downgraded Assured Guaranty (NYSE: AGO) and Lenovo Group (LNVGY) to Neutral from Overweight.
  
• iStar Financial (NYSE: SFI) was downgraded to Sell from Buy at UBS.
  
• Goldman removed Gilead Sciences (NASDAQ: GILD) from the Conviction Buy List.

MOST NOTEWORTHY: American Eagle, Hologic and British Airways were today's noteworthy downgrades:

• Friedman Billings downgraded American Eagle (NYSE: AEO) to Underperform from Market Perform citing slowing top-line growth, difficult macro-environment, and the challenging women's category.
  
• Soleil cut Hologic (NASDAQ: HOLX) to Hold from Buy as it believes the cancellation of the FDA Radiological Devices Panel means a further delay in the tomosynthesis pre-market approval application.
  
• ABN downgraded shares of British Airways (Other OTC: BAIRY) to Sell from Hold as it believes the recent rally in the face of higher oil prices is unjustified. Shares were also lowered at Deutsche Bank to Sell from Buy as it believes the company may not be able to raise ticket prices enough to offset higher fuel costs.

OTHER DOWNGRADES:

• ArthroCare (NASDAQ: ARTC) was cut to Accumulate from Buy at ThinkPanmure.
  
• ING downgraded J Sainsbury (Other OTC: JSAIY) to Sell from Hold.
  
• RBC Capital downgraded Ceragon Networks (NASDAQ: CRNT) to Sector Perform from outperform.

Arthrocare Corp. (NASDAQ: ARTC) shares are rising today after the company announced this morning that its board is evaluating financial and strategic options. If you think that the company 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 ARTC.

After hitting a one-year low of $33.89 in March, the stock hit a one-year high of 65.70 in November. ARTC opened this morning at $44.21. So far today the stock has hit a low of $43.71 and a high of $46.25. As of 12:45, ARTC is trading at $44.53, up $4.38 (10.9%). The chart for ARTC bearish but slightly improving.

For a bullish hedged play on this stock, I would consider a June bull-put credit spread below the $25 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. This particular trade will make a 5.3% return in just four months as long as ARTC is above $25 at June expiration. Arthrocare would have to fall by more than 43% before we would start to lose money.

ARTC hasn't been below $33 at all in the past year and has shown support around $40 recently. This trade could be risky if the company calls an end to this search for alternatives, but even if that happens, this position could be protected by the support the stock might find just around $40 where it has settles over the past month.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in ARTC.

On December 17th, StreetInsider.com wrote about a story in the New York Post that had shares of medical equipment company Arthrocare (NASDAQ: ARTC) trading down. According to StreetInsider:

According to the Post, about 75% of Arthrocare's US spinal unit business came from DiscoCare, although Arthrocare hasn't mentioned the unit's reliance on DiscoCare. The report also said the Massachusetts Attorney General's office is looking into the companies' relationship.

On Friday, Arthrocare defended itself, calling the reports materially inaccurate. Arthrocare also said it contacted the Massachusetts Attorney General's office and was informed that there was no such investigation.

Why am I quoting StreetInsider's story on a New York Post story rather than the New York Post itself? The Post piece on Arthrocare is no longer anywhere to be found! At one time, the story was located at this URL: http://www.nypost.com/seven/12112007/business/surgical_device_makers_growth_fueled_by__707429.htm

But now that's a dead link! Since then, Arthrocare has acquired DiscoCare, and the company has become a target of short-selling stock sleuth Andrew Left of Citron Research.

But it's hard to know what to make of the New York Post's vanishing act. Zack's equity analyst Gregory Aurand wrote this about the stock in the wake of the New York Post article:

ArthroCare (NASDAQ: ARTC), a medical device company, is recently down $2.48 to $52.42. ARTC December 50 straddle is priced at $6.10. ARTC call option volume of 1,233 contracts compares to put volume of 8,267 contracts. ARTC January option implied volatility of 64 is above its 26-week average of 41 according to Track Data, suggesting larger downside risks.

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

The market is hot! Everything seems to be moving. After almost four years of a pretty non-volatile market, the recent volatility in the market has taken the interest of all traders. In a more volatile market one has to remember that a looser stop is absolutely necessary to avoid being shaken out of positions. While the risk is greater, in a volatile market return potential increases as well.

Several of my recent ideas remain around the opening price while others have been doing very well. However, I have to attribute some of these quick gains to general optimism from the market today. Because I have been very bullish on a variety of momentum names, these shoot up quickly on days like Wednesday. But it's a double-sided sword -- when the market gets hit, these things get hit harder. I believe that if proper risk controls are in place, most importantly a stop-loss, then trading these names is a much more lucrative game than gaming normal stocks.

Most of my ideas these days are technically-oriented and there's a pretty simple explanation for this: the market isn't cheap enough to turn up tons of value investments -- my primary fundamental-based investments. While I've managed turn to up a couple value ideas, most notably Earthlink (NASDAQ: ELNK) here, I've also managed to turn up several growth-based fundamental ideas such as American Science & Engineering (NASDAQ: ASEI) (which reported great earnings the other day) here.

With a rapidly aging boomer population, this is a good time to be looking at a company like ArthroCare (NASDAQ: ARTC), which manufactures products that enable minimally invasive surgery. Its sports medicine division offers products to surgeons working on knees, ankles, elbows, hips, and other joints that are taking steady pounding among the millions of boomers who continue to lead active lifestyles. In addition to sports medicine, ARTC also has divisions focusing on products for the spine; ears, nose, and throat; and other general areas such as gynecology, cardiology, and urology.

All of these areas will be in increasing demand as the boomers age, and I think this is a company with enormous growth potential. Its revenues have been increasingly steadily over the past couple years, and the first quarter of 2007 showed an 18% growth over the first quarter of 2006. ARTC is scheduled to release its second-quarter earnings on Thursday, and BMO Financial Group recently released a report predicting revenue growth of 19% and EPS growth of 27% over the second quarter of 2006. BMO also forecast a jump in the stock price, all the way up to $53 (it's currently at $47), and I think they're absolutely right.