Non-farm payrolls came in higher than analysts' forecasts and the unemployment rate fell to 8.8%. That good news sent the Dow Jones Industrial Average to a new 2011 high. At midday the Dow was up 78 points to 12,397 -- as reported by the Wall Street Journal.

Except for a brief sell-off to the 11,500 level, the market has moved quickly to regain lost ground and is now at new highs. Last week the USDA's crop report was bullish for grains. It's not surprising that Caterpillar (CAT) led the charge, up 1.7%. But there are always some losers. Office Depot (ODP) fell 11% after reporting a fourth quarter loss and Krispy Kreme Doughnuts (KKD), which also had a fourth quarter loss, fell 17%.

In a recent letter to the governor of Illinois, Doug Oberhelman, CEO of heavy machinery maker Caterpillar (CAT), outlined his concerns about new state taxes that could force the Illinois-based company to move operations to another state. Reportedly, Wisconsin, Indiana and New Jersey are all courting the company.

With 23,000 Caterpillar employees in Illinois, the stakes are high. Hopefully, Governor Pat Quinn and Oberhelman will be able to work something out.

With several major developments occurring around the world, many investors may wonder how they could affect their portfolios or their lives. Here are two of the current, newsworthy events and how investors may interpret them.

Libya

The oil from Libya totaled about 2 million barrels a day before the revolution, half of which was exported. About 1 million barrels a day are no longer available to the world. That isn't enough to really affect the price of oil for a long period of time. Plenty of other countries can supply that amount without straining their capacity. But they're unlikely to step in to fill the gap when oil prices are above $100 a barrel. That price should recede once the conflict finishes and a more stable government is in place.

"Benjamin Graham has been recognized for decades as the father of value investing; Warren Buffett was a student of Ben Graham at Columbia University and later worked for Mr. Graham for several years," notes J. Royden Ward.

The editor of the Cabot Benjamin Graham Value Letter explains, "We've combined Warren Buffett's and Ben Graham's investing criteria for choosing stocks and and found six high-quality companies.

"We believe that the six stocks that passed our screen each sell at sensible prices, offer reasonable appreciation potential, and provide solid dividends.

The Japanese devastation is almost incomprehensible. First there was the earthquake, followed by the tsunami, followed by radiation. It seems the disaster has no end. The people are suffering beyond imagination. It will be a long time for the country to heal. In the north, it will take decades.

Investors are trying to understand what the economic aftershocks will be. Which industries will be hurt and which ones will benefit? Because the crises change from day to day, it's extremely difficult to ascertain. But there are a few themes that seem to be emerging. Some of these will be short lived, such as the closing of the Japanese auto manufacturers. While they will lose days of production, the long-term effect will be minor, unless supplies are interrupted, causing further delays.

Analyst Upgrades

• Wells Fargo (WFC) to conviction buy from neutral at Goldman.
• Adobe (ADBE) to buy from neutral at UBS.
• Fifth Third Bancorp (FITB) to outperform from market perform at FBR Capital.
• Vail Resorts (MTN) and Goldcorp (GG) to buy from hold at Deutsche Bank.
• OmniVision (OVTI) to overweight from neutral at JPMorgan.
• Penn Virginia (PVA) to hold from sell at Canaccord.
• Hub Group (HUBG) to outperform from market perform at Morgan Keegan.

With less than two hours to go before the market bell, Caterpillar (CAT) is off by 1.2% to $95.47. Volume is above average. How should investors look upon a dip in the stock? Does weakness offer an opportunity?

According to Briefing.com, net income for the fourth quarter came in at $1.47 per share. This was much better than the projection of $1.27 per share. In addition, the forecast for the new fiscal year is higher than what Wall Street was expecting. One negative note: there isn't any plan for share repurchases because of acquisition activities.

With earnings season in full swing, the FOMC meeting on interest rates, the GDP estimate, and housing numbers due out, the coming week is shaping up to be a busy one. So here's a peek at what's on the economic calendar.

Monday

Quarterly reports from American Express (AXP) and McDonald's (MCD) will highlight Monday. Amgen (AMGN), CSX (CSX), Halliburton (HAL) and Texas Instruments (TXN) are also expected to report strong earnings results.

It looks like my call to reconsider mining machine provider Bucyrus International (BUCY) on October 18, 2010, at a price of $74.44 proved to be the right one.

Bucyrus, which I originally discussed on June 22, 2009 at a price of $25.27, was stopped out, in a good way, for a roughly 80% gain at $46 last spring. At that time, BUCY was in the category of one of those trades where the sell/stop loss was just a tad too high.

Monday was a good day for Caterpillar (CAT). The maker of agricultural equipment closed up nearly 1.9% to $91.63. That might not sound like the biggest gain ever, but here's some context: During the intraday session, the stock hit a new 52-week high of $92.37. Not bad.

Of course, we all know about the significant headline catalyst: China didn't raise interest rates. That sent stocks higher. How should investors view an equity like Caterpillar in light of all the excitement?

Companies on a shopping spree either feel their growth is confined or they are feeling flush. In the case of Caterpiller (CAT), which reported that it is going to buy Bucyrus for $8.6 billion, it is the latter. The company has had a terrific year in which it has seen a 76% increase in it's growth. This rapid increase in business has pushed the PEG ratio down to a low 0.86 with the stock trading near its 52- week high.

From what I can gather, the deal between CAT and Bucyrus has merit. Does that mean this is a good time to buy Caterpillar stock? I don't think so. More often than not, stocks trading near their highs will present better entry points with greater value to the more patient investor.

Analyst Upgrades

• Wells Fargo upgraded Accenture (ACN) to outperform from market perform following the company's Q4 results, citing improved tone and increased visibility. The firm raised its target range for shares to $51 to $53 from $41 to $44.
• Macquarie upgraded FirstMerit (FMER) to outperform from neutral and has a $21 price target on the stock. The firm cites FirstMerit's strong fundamentals and competitive advantage for the upgrade.
• Macquarie transferred coverage on Marshall & Ilsley (MI) with a neutral from an underperform based on improved risk/reward.
• Eaton (ETN) was upgraded to overweight from neutral at JPMorgan.
• HSBC (HBC) was upgraded to conviction buy from buy at Goldman.
• Walgreen (WAG) was upgraded to overweight from equal weight at Morgan Stanley.

Someone has to build the foundation for an economic recovery, and Caterpillar (CAT) has all the right tools to do so.

As the economy continues to recover and governments and corporations begin to rebuild, investment in heavy machinery is picking up.

On Friday, Caterpillar reported that the company's machine sales rose worldwide for the first time since late 2008, growing 11% from the same year-ago period ending in May. Asian sales led the way with an increase of 38%, but North America wasn't too far behind with gains of 15% over last year. Unfortunately, sales in Europe declined by 8%.

Analyst Upgrades

• Soleil upgraded Starwood Hotels (HOT) to buy from hold, citing accelerating RevPAR comps and valuation. The firm upped its target for shares to $57 from $55.
• TD Newcrest upgraded Ivanhoe Mines (IVN) to speculative buy from hold based on valuation.
• BMO Capital upgraded Power Integrations (POWI) and ON Semiconductor (ONNN) to outperform from market perform based on valuation. The firm has a $45 target on Power Integrations and a $9 target on ON Semiconductor.
• Priceline.com (PCLN) was upgraded to buy from neutral at Goldman.
• Reliance Steel (RS) was upgraded to buy from neutral at UBS.
• AXA (AXA) was upgraded to add from neutral at WestLB.
  

Caterpillar (CAT - option chain) shares are rising today after the company announced after yesterday's closing bell that its Board has elected Doug Oberhelman Chief Executive Officer and a member of Board of Directors, effective July 1. Oberhelman is an internal hire who spent the last six months leading a team updating the company's Vision 2020 strategy. 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 CAT.

CAT opened this morning at $58.31. So far today the stock has hit a low of $58.00 and a high of $59.90. As of 11:55, CAT is trading at $59.22 up $2.41 (4.2%). The chart for CAT looks bullish and S&P gives CAT a positive 4 STARS (out of 5) buy ranking.