Definitely not-for-the-squeamish Delta Air Line's (DAL) stock has plunged in bear-hug fashion during the winter to $9.80 from $14.70, and is now dangerously close to the sell/stop loss at $8.

Delta Air Lines, first discussed here on July 19, 2010, at a price of $10.73, would likely have been a leader of a rejuvenated airline sector until Middle East unrest, including the ongoing civil war in Libya, sent oil prices above $105 per barrel. That crude surge has pushed jet fuel prices -- typically the second biggest or biggest expense for an airline -- substantially higher.

The U.S. airline sector, aided by decreased capacity from mergers, is on course to record one of its best years in many, and Delta Air Lines (DAL), first discussed here on July 19, 2010, at a price of $10.73, may be the leader of the pack.

Nevertheless, keep in mind that I consider Delta to be a high-risk stock not suitable for moderate-risk or low-risk investors. Don't consider DAL if you can't tolerate a 30% to 50% drop in the stock's price: it could happen.

In fact, Delta's share have declined about 22% since hitting highs near $14.70 last autumn; the pullback follows a rise from about $9.50.

Analyst Upgrades

• Home Depot (HD) to buy from neutral at Goldman.
• Delta Air Lines (DAL) to buy from neutral at BofA/Merrill.
• Heico (HEI) to outperform from sector perform at RBC Capital.
• Royal Dutch Shell (RDS.A) to outperform from neutral at Credit Suisse.
• MB Financial (MBFI) to outperform from neutral at RW Baird.
• Quest Diagnostics (DGX) to equal weight from underweight at Morgan Stanley.
• Oshkosh (OSK) to neutral from underweight at JPMorgan.
• Volterra (VLTR) and Silicon Laboratories (SLAB) to buy from neutral at Roth Capital.
• Ascena Retail Group (ASNA) to overweight from neutral at Piper Jaffray.
• Cytec Industries (CYT) to buy from hold at Deutsche Bank.

U.S. stock futures are mostly higher this morning as investors await earnings reports from several companies. However, shares of Apple Inc (AAPL) dropped in pre-market trading. Futures on the Dow Jones Industrial Average rose 37 points to 11,762.00 and S&P 500 futures gained 2.20 points to 1,292.20. Futures on the Nasdaq 100, however, dropped 12.50 points to 2,307.50.

U.S. markets were closed on Monday for the Martin Luther King Day holiday. Stocks closed higher on Friday, with the Dow gaining 55.48 points, or 0.47%.

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).

Stocks discounted a higher jobless claims release on larger issues. Many called today an extension of QE2, but it was a two-part issue. First was Bernanke issuing a defense of QE2 in in an op-ed piece and second was the note from the White House that Obama may compromise on certain Bush tax cut extensions for all income brackets.

Here were today's unofficial closing bell levels:

Dow Jones 11,434.77 +219.64 (1.96%)
S&P 500 1,221.04 +23.08 (1.93%)
Nasdaq 2,577.34 +37.07 (1.46%)

Top Analyst Calls
High P/E Stocks To Watch

More Monday merger fun, this time from the airline sector. Reportedly, Southwest Airlines (LUV) announced that it will purchase AirTran Airlines for roughly $1.42 billion.

This move will be funded mainly with debt, and it will help Southwest establish a larger presence in cities like Boston and New York. What's more (as the article points out), Southwest will now be in "head-to-head competition with Delta Air Lines in Delta's home base of Atlanta."

Delta Air Lines (DAL) reported second quarter earnings per share of 55 cents, compared to the First Call estimate of 63 cents, and as expected the current take-no-prisoners stock market treated DAL rudely, sending shares down $1 to $10.73 in mid-day Monday trading.

Even so, for high-risk investors, now may represent a decent time to scoop-up some shares of DAL. Here's why:

Increasing business travel demand, generally tight system-wide capacity for leisure travel in the U.S., and moderating jet fuel prices on lower oil prices, should provide enough of a tailwind to help DAL exceed the $1.55 2010 earnings consensus estimate.

Analyst Upgrades

• Keefe Bruyette upgraded East West Bancorp (EWBC) to outperform from market perform after the company acquired assets from Washington First International Bank. The firm has a $21 price target for shares.
• Piper Jaffray upgraded Amylin (AMLN) to overweight from neutral, citing valuation and Bydureon's profile. The firm maintains a $26 price target for shares.
• Soleil upgraded MGM Mirage (MGM) to hold from sell, citing signs of stabilization in Vegas and valuation. The firm upped its target for shares to $13 from $11.10.
• T. Rowe Price (TROW) was upgraded to outperform from market perform at FBR Capital.
• JetBlue (JBLU) was upgraded to buy from neutral at BofA/Merrill.
• NetEase.com (NTES) was upgraded to buy from hold at Standpoint Research.

Delta Air Lines (DAL) CEO Richard Anderson recently made a cool $1.3 million by selling 100,000 shares of his company's stock at an average price of $13.47 per share. Obviously, this was a nice payday for Anderson, but should this stock sale be a red flag for Delta investors?

Analysts and traders love to watch insider stock transactions because they believe it will give them insight into the health of the company. If insiders are buying stock in their own company, it is viewed as a bullish sign for the company. If insiders are selling stock in their own company, it is often viewed as a bearish sign for the company. After all, who has more information about how well the company is doing than the CEO or some other member of senior management, right?

Unfortunately, it's not that cut and dry.

Early this morning, United Airlines (UAUA) and Continental Airlines (CAL) announced that they will join forces to create the world's largest airline in a $3 billion deal.

The new airline will be bigger than Delta Air Lines (DAL) and will send flights as far as Shanghai and South America. The companies believe that the span of destinations should attract more business travelers and their higher fares. The deal, which will need approval from shareholders and antitrust regulators, is expected to close in the fourth quarter. The new company will be known as United Continental Holdings and will be based in Chicago. The airline's largest hub will be located in Houston.

The silver lining to the travel slump last year was that fewer flights made it easier for airlines to hit their deadlines. In 2009, the airline sector had its best year for on-time arrivals since 2003, largely because many routes were cut as passenger traffic fell and companies looked for ways to cut costs. According to the Department of Transportation, airlines hit a 79.5% on-time rate last year (which includes flights that were within 15 minutes of their arrival time).

Hawaiian Airlines had the best record, but it's a small regional, lacking the challenges of the major carriers. Among the big guys, Southwest's (LUV) 83% on-time rate was best, and United's (UAUA) 81% was tops for traditional air carriers. Of course, these airlines and the rest of the sector were helped along by the fact that they pad their schedule, which makes it a hell of a lot easier to show up on time.

Delta Air Lines Inc. (DAL) said Thursday that it was one step closer to completing its merger with Northwest Airlines, which will create the world's largest air line by passenger traffic.

The two carriers received Federal Aviation Administration (FAA) authorization to operate as a single carrier. They can now fully combine flight numbers, schedules and ticketing under the Delta name. The air lines have already integrated many operating procedures, including the use common technical manuals.

The fact that there hasn't been any action in a while doesn't mean there isn't room for more. Richard Anderson, CEO of Delta Airlines (DAL), says that the airline industry could consolidate further -- not exactly a shock in an industry that is known for universal financial suffering. He notes, "If a transaction were to occur, economics should prevail."

The only concern, of course, is whether the Obama administration would sign off on any future deals. Anderson believes, "I think the case can be made ultimately, but it remains to be seen what this administration's take will be."

For years, it's been evident that smaller airlines have had an operating advantage, particularly when they use less expensive airports. They've been able to post better numbers as a result, and in the current travel slump, they've outperformed the larger carriers. Well, they've also picked up a considerable amount of market share.

According to a report by USA Today, low cost carriers now have 30% of the market in the United States. Price-sensitive consumers are turning to cheaper alternatives, even if it means (for fliers with elite status) giving up the perks they've earned through years of customer loyalty.