MOST NOTEWORTHY: RF Micro Devices, QLT Inc and Everest RE Group were today's noteworthy upgrades:

• Jefferies upgraded RF Micro (NASDAQ:RFMD) to Buy from Hold citing strong proprietary Asian channel checks. The firm believes RF Micro is past the worst of the inventory handset correction in Asia and that the MPG business is also recovering.
  
• RBC Capital said QLT Inc's (NASDAQ:QLTI) risk/reward has improved and expects divestment announcements to start in late Q2. The firm raised shares to Outperform from Sector Perform.
  
• Citigroup upgraded Everest RE (NYSE:RE) to Buy from Hold citing valuation, likely buybacks, the low risk of asbestos charges and the seasonal trade ahead.

OTHER UPGRADES:

• Merriman raised Level 3 Comm (NASDAQ:LVLT) to Neutral from Sell.
  
• Zions Bancorp (NASDAQ:ZION) was upgraded to Outperform from Neutral at Baird.
  
• True Religion (NASDAQ:TRLG) was raised at Morgan Keegan to Outperform from Market Perform.

MOST NOTEWORTHY: GlaxoSmithKline, FreeSeas and SINA Corp were today's noteworthy initiations:

• ING believes GlaxoSmithKline (NYSE: GSK) should benefit from the appointment of Andrew Witty as CEO and see limited downside risks. The firm initiated shares with a Buy rating.
  
• FreeSeas (NASDAQ: FREE) was started at Oppenheimer with an Outperform rating and $8 target, as they view FREE as an early stage growth company in the smaller dry-bulk vessel segment and finds the valuation attractive at current levels.
  
• Kaufman Bros. initiated SINA Corp (NASDAQ: SINA) with a Buy rating and $4.50 target, and believes China represents a compelling long-term growth opportunity.

OTHER INITIATIONS:

• Level 3 Comm (NASDAQ: LVLT) was initiated with a Underperform rating at Wachovia.
  
• Jefferies assumed Savient Pharma (NASDAQ: SVNT) with a Buy rating and $30 target.
  
• Lehman initiated Brown & Brown (NYSE: BRO) with an Underweight rating.

MOST NOTEWORTHY: UBS AG, KLA-Tencor and Level 3 Comm were today's noteworthy downgrades:

• Keefe Bruyette downgraded shares of UBS (NYSE: UBS) to Underperform from Market Perform as they expect as they expect further write-downs to erase profits in 2008.
• Oppenheimer downgraded shares of KLA-Tencor (NASDAQ: KLAC) to Underperform from Perform after checks indicated Intel (NASDAQ: INTC) has chosen Applied Materials' (NASDAQ: AMAT) reticle inspection tool for its entire 32nm node after a long period of evaluation against KLA-Tencor. Oppenheimer believes this represents a $300M shift from KLA-Tencor's dominant market share in reticle inspection.
  
• Jefferies cut Level 3 Communications (NASDAQ: LVLT) to Hold from Buy as they see limited opportunity for near-term share appreciation given the company's integration challenges and the added uncertainty from recent management changes.

OTHER DOWNGRADES:

• Keefe Bruyette downgraded Credit Suisse (NYSE: CS) to Market Perform from Outperform.
  
• Kroger (NYSE: KR) was downgraded to Underweight from Neutral at JP Morgan.
  
• Baird cut Network Appliance (NASDAQ: NTAP) to Neutral from Outperform.

MOST NOTEWORTHY: News Corp, Limelight Networks, Corning and Carmike Cinemas were today's noteworthy initiations:

• RBC Capital is positive on News Corporation's (NYSE: NWS) strategy of investing cash flow away from mature enterprises to fund high-growth initiatives such as Sky Italia and Fox Interactive Media. The firm initiated shares with an Outperform rating and $26 target.
  
• Kaufman Brothers rates Limelight Networks Inc (NASDAQ: LLNW) a Sell based on a significant increase in the competitive environment with Akamai discounting on large deals, Level 3 Communications Inc (NASDAQ: LVLT) introducing a competitive offering in November 2007, Korean major-CD Networks becoming aggressive, and new entrants becoming aggressive with their value propositions.
  
• Deutsche Bank initiated Corning Inc (NYSE: GLW) with a Buy rating and $31 target as they believe shares are fundamentally undervalued given the company's strong fundamentals and promising outlook.
  
• Carmike Cinemas Inc (NASDAQ: CKEC) was started at JP Morgan with an Overweight rating. The firm said the company is the most exposed to 3-D, which could lead to potential upside due to low margins and leverage capital structure.

OTHER INITIATIONS:

• UBS started shares of St. Jude Medical Inc (NYSE: STJ) with a Sell rating and $43 target and shares of Medtronic Inc (NYSE: MDT) with a Buy rating and $64 target.
  
• Bear Stearns initiated shares of TJX Companies Inc (NYSE: TJX) and Ross Stores Inc (NASDAQ: ROST) with Peer Perform ratings.
  
• KeyBanc initiated shares of LaSalle Hotel Properties (NYSE: LHO) with a Hold rating.
  
• Caris started shares of Acme Packet Inc (NASDAQ: APKT) with an Above Average rating and $17 target.

MOST NOTEWORTHY: Applix, Time Warner, Apple and Level 3 Communications were today's noteworthy downgrades:

• Applix Inc (NASDAQ: APLX) was downgraded to Neutral from Buy at First Albany and SunTrust Robinson Humphrey following the acquisition by Cognos Inc (NASDAQ: COGN).
• Time Warner Inc (NYSE: TWX) was downgrade to Neutral from Buy at Pali Capital. The firm has lost faith in Time Warner's executive management team and Board of Directors and feels the outlook for AOL is concerning.
• Gabelli downgraded Apple Inc (NASDAQ: AAPL) shares to Hold from Buy on iPhone concerns and valuation as they view the iPhone price cut as an indication that sales are not living up to management's expectations.
• Buckingham Research downgraded shares of Level 3 Communications Inc (NASDAQ: LVLT) to Underperform from Neutral citing deterioration in demand for some key products.

OTHER DOWNGRADES:

• SL Green Realty (NYSE: SLG) was downgraded to Equal Weight from Overweight at Lehman Brothers.
• Citigroup downgraded shares of Volkswagen AG (OTC: VLKAY) to Sell from Hold.
• Zumiez Inc (NASDAQ: ZUMZ) was downgraded to Market Perform from Outperform at Morgan Keegan.
  
• JP Morgan downgraded Northeast Utilities (NYSE: NU) to Neutral from Overweight.
• Goldman Sachs downgraded Radiation Therapy Services Inc (NASDAQ: RTSX) to Neutral from Buy.

With weak futures this morning and panic selling at the end of the trading day yesterday, it is time to start looking at buying some stock. The market is so oversold it could mean we are due for a pretty good short term rally. Stocks to consider include:

• Home Depot Inc. (NYSE: HD) -- Barron's was on target this past weekend writing that the home-improvement retailer could have considerable upside in the years ahead. The company still has a tender on the market between $39 and $44, the record day of which may have passed, but there is $10 to $12 billion in buybacks still to come.
• National Semiconductor Corporation (NYSE: NSM) -- iPhones are selling and the move to wireless is still the rage, which fits into this wireless semiconductors sweet spot. Following a strong earnings report and a huge share repurchase agreement, the stock rallied to $29.60, but it is now down below $26, essentially erasing all the gains for the good earnings. This is a good entry point.
• AES Corporation (NYSE: AES) -- The Fly blogged about this one the other day, with the stock down 15% from its recent high, and continuing to trade poorly, this stock may be worth scooping up.

We blogged about a trading opportunity in Level 3 Communications Inc (NASDAQ: LVLT) the other day, and the stock rallied from $5.00 to $5.40. For those who were nimble enough to sell into yesterday's strength, that trade worked out well. The trades listed above should also work out well as this oversold market has a short-term rebound.

Level 3 Communications (NASDAQ: LVLT), the IP telecommunications company, got hit pretty good yesterday due to the market's broad-based sell-off and its coming up short on revenue.

Management cited integration issues due to its seven recently completed acquisitions as the prime reason. The sales backlog is increasing but it is slow bringing customers on to its network. Level 3 will be a show-me stock for the next few quarters as management will have to hit their numbers to regain investors' confidence. October is expected to be another weak quarter, but business is expected to ramp in 4Q.

However, with what looks like a weak or a flat opening this morning in combination with yesterday's sell off, a quick recoil is possible from its oversold condition for traders to make a nice profit on.

Typically, a growth stock is defined by rapid revenue and profit growth. Does this make commodity companies growth stocks? Revenue and profits are soaring, but the reality is volume growth for many commodities is unspectacular, with demand increasing in the low-to-mid single digits.

When Henry Ford came up with the Model T, most other automobile manufacturers would produce several hundred cars per year and charge several thousand dollars per car, according to Wall Street historian John Steele Gordon in this weekend's Barron's. In 1908, Ford made 10,607 Model Ts, selling them for $850 each. By utilizing the assembly line, Ford was able to drive down cost, which, in turn, permitted him to charge customers less. Lower prices meant more Americans could afford automobiles, translating into huge volume growth and massive economies of scale for Ford Motor and its part suppliers.

By 1916, Model Ts were being assembled in only 93 minutes and the price dropped to $360, according to Gordon. Ford Motor sold 730,041 Model Ts that year and had 50% global market share. Volume in the auto industry was no longer being defined by a few hundred but by hundreds of thousand if not a million cars produced each year.

What industries demonstrate these characteristics today? It is not the auto sector any longer, that's for sure. Wal-Mart Stores (NYSE: WMT) and Home Depot Inc (NYSE: HD) successfully played the economies-of-scale curve for decades. Semiconductors and technologies are still on this curve. Moore's Law is all about playing this strength.

Level 3 Communications Inc (NASDAQ: LVLT) reported very solid results yesterday, however, the organic growth rate seemed to slip from its 24% target down to 17%. This led to the stock getting hit a bit by investors in yesterday's trading.

I would use this price weakness to buy the stock.

Supposedly, Level 3 walked away from weak pricing in the enterprise business, something it can now afford to do since its balance sheet is in much stronger shape. What is also a positive is that most of the restrictive loan covenant agreements on its debt are now gone, which means it can focus on profitability and not revenue generation, which was a covenant that drove business decisions in the past.

Level 3 also remains on the path to being free cash flow positive, which has proven a boon for communications stock prices previously.

The other positive for Level 3 is that video usage is ramping up but revenue has not as of yet. This means when video pricing takes hold, Level 3 revenue growth should accelerate considerably.

The dynamics of this business are two powerful to ignore. I'd use the price weakness to buy this stock and put away.

Stocks that have held up best during this correction are most likely showing us where investor conviction is the strongest.

For example, one area that has held up surprising well is the Internet Protocol transport sector. Companies like Level 3 Communications Inc (NASDAQ: LVLT), Global Crossing Ltd (NADSAQ: GLBC), and Time Warner Telecom Inc (NASDAQ: TWTC) have changed little in price.

In previous corrections, these IP transport stocks would get crushed. However, that is not the case anymore.

This is a sign to stay with these stock and add to your position as the broader market continues to correct. If investors aren't selling these stocks now, it most likely indicates confidence is building in this space.

Additionally, Expedia inc (NASDAQ: EXPE), the online travel giant, has also held up very well, changing little in price during this correction. The stock has traded all over the place in previous corrections. This is a sign that investor confidence is improving here also.

All four stocks mentioned in this blog have good unit volume growth, operate low-cost businesses and appear to have pricing power returning to their industry -- a good combination to make some good money.

After Cisco Systems Inc's (NASDAQ: CSCO) outstanding results, we blogged that another way to play the huge growth in IP traffic was through pure IP service providers such as Level 3 Communications Inc (NASDAQ: LVLT), Global Crossing Limited (NASDAQ: GLBC) and Time Warner Telecom (NASDAQ: TWTC). That day, these stocks rallied big, especially Level 3.

Yesterday, Level 3 reported outstanding results but the stock gave back all the gains made on Wednesday. Why? The company said EBITDA would be down sequentially.

I would use yesterday's price weakness to get into this stock. Level 3 is going to spend a boat load of money in the first quarter to properly integrate Broadwing and the other companies it acquired during 2006. After that, operating results, along with the stock, should be off to the races again.

Sprint Nextel Corporation (NYSE: S) has been one disaster of a merger because it never bit the bullet and spent the money to properly integrate the two companies. Sprint, after years of poor performance, is finally going to do the ugly work. But it might be too late.

The strong underlying trends in Level 3's business are too powerful to ignore. The core IP communications business is growing 25% to 30% per year, its growth rate and operating margins are the best in the industry and it continues to attract better and better customers--the who's who of the Internet era. In addition, Level 3 will substantially improve the debt-to-EBITDA ratio by 2008.

Yesterday's sell off was an overreaction. I would use it as a buying opportunity.

Cisco Systems Inc's (NASDAQ: CSCO) quarter-after-quarter of strong results is due to its focus and domination in developing the best Internet Protocol (IP) networking technology. Are there other ways to invest in IP and profit? Look at the remaining pure IP service providers:

• Level 3 Communications (NASDAQ: LVLT)
• Time Warner Telecom Inc (NASDAQ: TWTC)
• Global Crossing Limited (NASDAQ: GLBC)
• Qwest Communications International Inc(NYSE: Q)

Level 3 still has the most bang for the buck. Also, do not forget about Qwest, which owns an old Baby Bell but also owns a sizable nationwide IP backbone.

Chambers mentioned a number of interesting statistics during Cisco's conference call. Cisco's optical business grew 40% and its sales to service providers jumped 20%. Chambers went as far as to say that there are signs in the enterprise space that look very much like that of the mid 1990s before technology stocks went through the roof.

If Chambers forecast proves to be correct, this most likely means a shortage of pure IP capacity could be on the horizon.

Last night in its conference call, Intel Corp (NASDAQ: INTC) said that the consumer will be driving the first ramp in demand for Microsoft Corp's (NASDAQ: MSFT) Vista operating system. Tonight, Apple Inc (NASDAQ: AAPL) will report results. The company's huge success has obviously been driven by the iPod, a consumer product.

However, beneath the headlines, Intel mentioned that its server business is doing quite well. Also, other large-volume high-end companies such as Sun Microsystems (NASDAQ: SUNW), Level 3 Communications (NASDAQ: LVLT), International Business Machines (NYSE: IBM) and possibly EMC Corp (NYSE: EMC) are seeing improvement in their operating performances.

While investor attention is still focused on Apple, the iPod and the consumer, the revenue and operating performance of technology companies focused on the business customer appear to be improving nicely for the first time in a long time.

A good leading indicator of stock market performance is looking at the leading Internet companies. So far in 2007, the leading internet companies are doing quite well:

• Yahoo!, Inc. (NASDAQ: YHOO): +13.0%
• Google Inc (NASDAQ: GOOG): +7.2%
• Level 3 (NASDAQ: LVLT): +14.0%
• Sun Microsystems (NASDAQ: SUNW): +10.2%
• ebay , Inc.(NASDAQ: EBAY): -2.5%
• Amazon.com, Inc.(NASDAQ: AMZN): -3.3%

Search is doing well (Yahoo and Google), the physical network of the Internet is also doing well (Level 3 and Sun), but internet retailing is having a tough time early on (ebay and Amazon).

Overall, the strong performance of these leading companies is a good sign for the market. Often, the best of the best take off way before the market does. This strong start in 2007 bodes well for tech in 2007.

Savvis Corp (NASDAQ: SVVS), a left-for-dead tech-telecom bubble stock, continues to come back to life. While most investors are on vacation, Savvis, a large independent data center company, released some interesting news this morning.

• Savvis will add 180,000 square feet of raised floor space through new construction. This will increase its total data center footprint more than 10% to over 1.5 million square feet.
• Savvis will also sell its content delivery network services business to Level 3 Communications (NASDAQ: LVLT) for $135 million in cash. Management said it will focus on its core hosting and managed network services businesses.
  

Savvis and Equinix (NASDAQ: EQIX), another independent publicly traded data center company, continue to benefit from the strong demand for data center space. Customers require high standards for security and reliability, power availability, cooling, network connectivity, and environmental controls. Savvis has pre-booked most of the new space.

The expansion is expected to cost $200 million. With $135 million coming from the asset sale to Level 3 and 2007 EBITDA expected to come at $150 million, Savvis can fund this expansion without using outside financing---a very good sign of the financial health of the company and for increasing shareholder value.

Since TheFly blogged in April to begin looking at this sector again, Savvis and Equinix are up 38% and 31%, respectively.