Analyst upgrades:

• Oppenheimer upgraded shares of Premiere Global (NYSE: PGI) to Outperform from Perform on valuation and believes the company's strategic initiatives will drive "healthy" top-line results in a difficult economy.
  
• Citigroup upgraded Prudential (NYSE: PRU) to Buy from Hold on valuation, as they believe the stock is oversold at current levels. Though upgraded, the firm lowered their target price to $30 from $80.
  
• Citigroup also upgraded Bankrate (NASDAQ: RATE) to Buy from Hold as they believe the company will benefit from the financial market volatility and that the risk/reward is attractive at current levels. The firm maintains a $40 target on the stock.
• Hospitality Properties (NYSE: HPT) was raised to Outperform from Sector Perform at RBC Capital.
  
• Diamond Offshore (NYSE: DO) was upgraded at Merrill Lynch to Buy from Neutral.
  
• Alcon (NYSE: ACL) was upgraded to Outperform from Market Perform at Wachovia.

"Prices for energy stocks, including the drillers, are bombed-out and should be aggressively accumulated now," says resource expert Eric Roseman.

Here, the editor of The Commodity Trend Alert explains, "The absolute worst thing we can do is sell now." Here's his outlook on energy and drilling and a trio of buys.

"The pain felt by commodity bulls should abate shortly; this mind-blowing expansion of credit will ultimately fuel inflation to much higher levels. Eventually, long-term interest rates will rise sharply in the United States as the government grows hungrier to finance its out-of-control spending habits.

"What we're seeing now is a market that has gone from being obsessed with inflation just two months ago to one now worried about rapid deflation or an environment of declining prices. Combined with bad economic news overseas, the U.S. dollar has seen a violent reversal exacerbating the plunge in raw materials. It's been a brutal sell-off and the worst decline I've seen since mid-2006.

No matter what any CEO, analyst, "guru", "market expert", strategist, fund manager, trader or message board poster says (few show all their trades and investments like me, nor are they up 60% in 2008, see details here), never try to catch a falling knife. Before I list all the current ones, I really have to pound it into your heads that buying these things in hugely uncertain -- and possibly disastrous -- times like these is not only dangerous, it's just plain irresponsible.

Here are some current falling knives:

• General Electric Co. (NYSE: GE)
• General Motors Corp (NYSE: GM)
• Citigroup Inc (NYSE: C)
• Merrill Lynch & Co Inc (NYSE: MER)
• Washington Mutual Inc (NYSE: WM)
• Bank of America (NYSE: BAC)
• American International Group Inc (NYSE: AIG)

Now, I don't want to hear those "I'm a long-term investor in blue-chip stocks" and "these are quality companies trading at discount prices"-type comments. While it's possible these stocks will bounce, the risk-reward ratio is downright awful here, just as its been for the past several months (as I've been warning in posts like this and this).

It's time to start drilling for oil and natural gas offshore on the east and west coasts. We are wasting our time and our money, and risking our future by not doing so. The energy needs of the United States have made oil our number one import and the biggest factor in our imbalance of trade.

It is not just that oil holds us hostage to the rest of the world. This imbalance of trade means we cannot support ourselves and must borrow from others to get by, and I, for one, have a very hard time with that notion. I prefer independence -- remember that? I think it was an important concept in our founding, way back when.

The imbalance in trade is a mortgage against the future of our children and it is getting worse year after year. The money often goes to foreign governments whose interests are not aligned with ours and they hold us politically and economically captive. Nothing is more shameful than President Bush pleading with Saudi Monarchs to pump more oil.

MOST NOTEWORTHY:

• Rodman & Renshaw is positive on MedicNova's (NASDAQ:MNOV) two primary products in development: MN-221, for the treatment of severe asthma and MN-166, an oral treatment for multiple sclerosis. The firm is also positive on MNOV's valuation; shares were initiated with an Outperform rating and $9 target.
  
• Transocean (NYSE:RIG) is UBS's Top Pick as they believe it is the primary beneficiary of rising deepwater dayrates. Shares were assumed with a Buy rating and $201 target.
  
• Suntrust initiated Lennox (NYSE:LII) with a Neutral rating and cites near-term visibility.

• Dean Foods (NYSE:DF) was initiated with an Outperform rating and $29 target.
  
• Goldman started Parker-Hannifin (NYSE:PH) with a Neutral rating and $92 target.
  
• UBS assumed Hercules Offshore (NASDAQ:HERO) and Pride International (NYSE:PDE) with Neutral ratings and targets of $35 and $49, respectively.

MOST NOTEWORTHY:

• Citigroup downgraded shares of EMC Corp (NYSE: EMC) to hold from buy and Emulex (NYSE: ELX) to sell from buy and lowered its targets to $17 from $22 and to $12 from $20, respectively, to reflect their more cautious stance on the storage space after channel checks indicated a broadly softening demand environment, most notably for 'higher ticket' items.
  
• Merriman downgraded shares of VCG Holding (NASDAQ:VCGH) to neutral from buy following the Q4 miss, as they believe acquisitions could slow in the near-term. They prefer to move to the sidelines until the company's outlook improves.
  
• Oppenheimer downgraded Conexant (NASDAQ: CNXT) to perform from outperform as they believe the CEO departure could interrupt the company's turnaround.

• Hercules Offshore (NASDAQ: HERO) was cut to hold from buy at Deutsche Bank.
  
• JP Morgan downgraded Blockbuster (NYSE: BBI) to neutral from overweight.
  
• Affymetrix (NASDAQ: AFFX) was downgraded to underperform from peer perform at Bear.

• The Chicago Board of Trade (NYSE: BOT) and Chicago Mercantile Exchange Holdings Inc (NYSE: CME) to hold a special shareholder meeting in Chicago about merging at 4pm.
• Take-Two Interactive Software (NASDAQ: TTWO) to hold a business update at 4:30pm.
• Alcoa Inc (NYSE: AA) to report Q2 earnings; conference call at 5pm.

• Electronic Entertainment Expo, or E3, to be held from July 10-July 13 in Santa Monica, California.
• The Home Depot Inc (NYSE: HD) to release a 2007 Sales Update at 9am.
• Sealy Corporation (NYSE: ZZ) to report Q2 earnings; conference call at 5pm.

Last December, over 100 stocks were featured in our Top Picks for 2007 report. Now, at mid-year, we turn to the 20 advisors whose picks showed the strongest gains to get an update on their previous picks, as well as a new favorite stock for the second half of the year.

Jon Markman, editor of Strategic Advantage, chose banking software company FundTech Ltd. (NASDAQ: FNDT), which rose 41% as of June 1, 2007. The advisor has just sold the stock from his model portfolio.

For his new favorite idea for the balance of 2007, the advisor looks to Hercules Offshore Inc. (NASDAQ: HERO). He explains, "Energy companies' shares might seem high to you now, but you ain't seen nothin' yet. When investors collectively decide that the new 'band' for oil prices is $50 to $65 rather than $35 to $50, then virtually all energy stocks are in for a major upward move.

"In this scenario, every subsector of the energy industry will move higher: Oil and gas drillers, services providers, explorers, refiners, pipeline owners, and the major integrators. We are just in the third inning of the game now, and it should continue to surprise people.

"All this is good news for the energy companies, but not such great news for the average consumer. We know how gasoline prices are breaking budgets.

"So in order to put some of the cash you're shelling out at the pump each week back into your pockets, I've been suggesting a couple of other energy companies that are set to profit from higher oil and natural gas prices as well as drilling rates.

Shallow water contract driller Hercules Offshore (NASDAQ: HERO) is the latest addition to the speculative "Advantage Portfolio" developed by Elliott Gue for the Personal Finance newsletter.

The company operates primarily in the shallow waters of the Gulf of Mexico. Gue points out that in the shallow Gulf waters, the most common type of drilling rig is what's known as a jackup. These, he notes, consist of a platform attached to four or more legs that rest on the sea floor and are used to drill in water up to a few hundred feet deep.

Gue says, "Most oil and gas producers don't own their own rigs. Rather, these rigs are leased from contract drillers like Hercules for a fee known as a day-rate. Hercules currently owns nine jackup rigs and a fleet of boats used to maintain wells and platforms."

The company, he notes, is in the process of acquiring Todco, a firm with a fleet of 24 jackup rigs and 27 inland barge rigs used for even shallower water drilling. In the wake of this acquisition, Gue notes, Hercules will be a dominant contract driller in the shallow-water Gulf.

Today, April contracts for light, sweet crude oil finished the day at $62.11 per barrel on the New York Mercantile Exchange and Brent crude finished trading at $62.38 per barrel on the London Exchange (Data source: AP). This is a two-month high for the commodity.

I believe the run in crude oil is not over due to the macroeconomic situation (increasing demand worldwide) and the solid upside trend being established in the commodity. I also believe the commodity could rise as professional investors (e.g. hedge funds) are hesitant to invest heavily in the equity markets due to Tuesday's performance. Investors interested in playing a continued rally in the commodity have several options: the underlying commodity (through a futures broker or multi-product broker such as Interactive Brokers), the crude oil ETF (ticker OIL), or a publicly traded oil/gas company. Each of these methods would have their benefits and negatives. Although the underlying commodity most-closely tracks the price of crude oil (because it is the underlying contract), this product could be very difficult for many readers to purchase if they do not use a multi-product broker or have a futures-trading account. In addition, generally speaking, futures are a risky game to play without being fully informed on the risks, mainly the amount of leverage available. While leverage is very appealing to beginners at first glance, many quickly forget it works both ways and are unpleasantly reminded when they find their futures contract trading down. The crude oil ETF is more appropriate for non-professional investors for several reasons. Primarily, ETFs can be purchased through any stock broker at normal commissions. Consequently, the margin requirements are the same as any other stock (2:1 margin in most cases, 4:1 in some cases) so amateur investors would face less risk of a big loss. Lastly, the publicly-traded company option is most appropriate for investors who enjoy and succeed in performing analysis on and trading individual stocks.

I have been following two oil stocks lately. First, Hercules Offshore, Inc (NASDAQ:HERO) appears to be pretty cheap and has recently caught a bid. The company provides shallow-water drilling services. It boasts a solid balance sheet, a multiple of less than 5 on TTM EV/EBITDA, and a mere multiple of less than 6 on 2008 earnings. The company's stock has also recently caught a bid recently moving off its $25 per share base towards the end of February.

In addition, I have been watching faster-growth Flotek Industries, Inc. (AMEX:FTK). This company provides products, specifically tools, to oil and natural gas drilling companies. The company bears higher-risk than HERO due to its much steeper valuation (and recent selling by some insiders) but I think it could be worth the risk because the company is growing at a much faster rate. Like Hercules, this stock has also been catching a bid recently - moving from $23 range of late January to its current price of $27. The stock was down today.

It seems like the oil-thesis is back in play (after being out of favor for several months). I believe the sector is going to remain in an uptrend due to the positive fundamentals (steady demand worldwide) and the uncertainty in the equity markets which should cause more fund managers to move towards other investment products (commodities, currencies, etc.) to try to avoid extremely high volatility, like the volatility experienced in the US markets on Tuesday.