eBay (EBAY) January 29 and 30 puts are active on flat volatility with total call volume of 37K contracts compared to 103K puts, according to Track Data. The increase in trading of the January 29 and 30 puts suggest traders anticipate movement into its Q4 January 19 EPS report.

BMO Financial Group (BMO) announced that it will acquire all outstanding shares of common stock of Marshall & Ilsley (MI) in a stock-for-stock transaction. Under the terms of the agreement, each outstanding share of M&I will be exchanged for 0.1257 shares of Bank of Montreal upon closing. BMO Financial Group overall option implied volatility of 21 is below its 26-week average of 27, according to Track Data, suggesting decreasing price movement.

CBOE Volatility Index (VIX) traded down 10% to at intra-day low of 15.46, an eight-month low.

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

The U.S. House of Representatives passed the tax bill that had already been approved by the Senate, but that did little, if anything, to put a charge into the market today. Better-than-expected earnings reported after markets closed yesterday from Oracle and Research in Motion didn't boost the opening today either. Later in the morning, the report on leading economic indicators from the Conference Board also showed improvement, rising 0.4% in October. The dollar rose slightly on the forex market following Moody's five-notch downgrade of Irish debt. All in all, a day of mixed news with mixed results.

Here are the numbers for late afternoon trading today:

Dow Jones 11,491.98 -7.27 (-0.06%)
S&P 500 1,243.91 +1.04 (0.08%)
Nasdaq 2,642.97 +5.66 (0.21%)

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.

Analyst upgrades:

• UBS upgraded Salesforce.com (CRM) to Buy from Neutral based on positive feedback on the Chatter product and increasing confidence the company can beat FY11 guidance. The firm raised its price target to $111 from $90.
• Leerink upgraded Vivus (VVUS) to Outperform from Market Perform. The firm believes Qnexa issues raised by the FDA are labeling and marketing issues, and not approval issues. The firm expects a positive panel vote for Qnexa.
• Goldman upgraded AK Steel (AKS) to Buy from Netural citing lower iron ore prices. The firm has a $17 price target on the stock.
• Kinder Morgan Energy (KMP) was upgraded to Equal Weight at Morgan Stanley.
• Shire (SHPGY) was upgraded to Outperform from Neutral at Credit Suisse.
• Canadian National (CNI) was upgraded to Outperform from Market Perform at Raymond James.

Analyst Upgrades

• Scotia Capital upgraded Apple (AAPL) to outperform from sector perform, citing valuation, potential increased iPhone distribution and iPad upside. The firm's two-year price target is $325.
• UBS upgraded Parker-Hannifin (PH) to neutral from sell following the company's better-than-expected Q3 report.
• Piper Jaffray upgraded Arkansas Best (ABFS) to neutral from underweight after the Teamsters union announced a tentative agreement with the company. The firm has a $33 price target for shares.
• Harley-Davidson (HOG) was upgraded to market perform from underperform at Raymond James.
• Allegheny Tech (ATI) was upgraded to buy from hold at KeyBanc.
• Manhattan Associates (MANH) was upgraded to buy from hold at Benchmark.

Last week, JPMorgan Chase & Co. (JPM) led off the coming parade of earnings from the big banks when it reported better-than-expected fourth-quarter and full-year earnings, though its revenue fell short of estimates.

Plenty more earnings from the financial sector are due out this week. Analysts surveyed by Thomson Reuters anticipate fourth-quarter earnings growth from American Express Co. (AXP), Bank of New York Mellon Corp. (BK), Hudson City Bancorp Inc. (HCBK), SLM Corp. (SLM) and US Bancorp (USB).

• Deutsche Bank upgraded Freeport McMoRan (NYSE: FCX) to Buy from Hold to reflect the company's better than expected Q3 results and improved volume outlook. Deutsche raised its target on shares to $100 from $72.
• Thomas Weisel upgraded Motorola (NYSE: MOT) to Overweight from Market Weight and raised its target to $11 from $7 and said they expect Motorola to benefit from several upcoming catalysts that include new Android-based smartphone products and they believe the handset division could break even by year end of 2010.
• Janney Montgomery upgraded Regal Entertainment (NYSE: RGC) and Cinemark (NYSE: CNK) to Buy from Neutral on expectations both companies will benefit from a strong box office in Q4. The firm has a $14 price target on Regal shares and a $13.50 target on Cinemark shares.
• Marshall & llsley (NYSE: MI) was upgraded to Neutral from Underweight at JPMorgan.
• F5 Networks (NASDAQ: FFIV) was upgraded to Neutral from Sell at UBS.
• William Blair upgraded Lindsay Corporation (NYSE: LNN) to Outperform from Market Perform.

The earnings crunch ramps up this week, and again expectations are generally low. Among the so-called bellwethers that are expected to report lower earnings year over year are CSX Corp. (NYSE: CSX), Gannett Inc. (NYSE: GCI), General Electric Co. (NYSE: GE), Harley Davidson Inc. (NYSE: HOG), Intel Corp. (NASDAQ: INTC), International Business Machines Corp. (NYSE: IBM), Johnson & Johnson (NYSE: JNJ), Marriott International Inc. (NYSE: MAR), Mattel Inc. (NYSE: MAT), Nokia Corp. (NYSE: NOK), and Yum! Brands Inc. (NYSE: YUM). Analysts surveyed by Thomson Reuters do expect the profits of CSX, Gannett, Mattel, and Nokia to be up from the previous quarter, however.

A number of financial companies, big and small, are scheduled to report second-quarter earnings this week, providing a good look at what's going on in the sector. Perhaps the best news will be coming from Citigroup and Marshall & Ilsley. While they are expected to post further losses, at least they are headed in the right direction by narrowing those losses year over year.

• Citigroup upgraded Blue Nile (NASDAQ: NILE) shares to Buy from Hold on valuation following the recent sell-off as they believe weakening fundamentals have been factored into estimates and that Blue Nile should benefit from the recent softening of diamond prices. The firm raised its target price to $30 from $20.
  
• Baird upgraded AmSurg (NASDAQ: AMSG) to Outperform from Neutral based on valuation, potential upside from in-line results, good visibility, and FCF yield.
  
• Oppenheimer upgraded DryShips (NASDAQ: DRYS) to Perform from Underperform on valuation following the recent weakness and believes the company is at least halfway through its $500M equity offering.
• UAL Corp (NASDAQ: UAUA) was raised to Buy from Neutral at Banc of America/Merrill.
  
• Mylan (NASDAQ: MYL) was upgraded to Overweight from Equal Weight at Barclays.
  
• Exxon Mobil (NYSE: XOM) was lifted at Deutsche Bank to Buy from Hold.

The new earnings season ramps up this week as Alcoa Inc. (NYSE: AA) reports fourth-quarter results. Last week, the Pittsburgh-based producer of aluminum and alumina announced layoffs and production cuts as a reaction to the economic downturn. Analysts surveyed by Thomson Reuters expect that Alcoa will have swung to its first quarterly loss in years: $0.10 per share. That compares to a profit of $0.36 per share in the same period of the previous year. Revenues for the quarter are expected to have fallen 28.8% from a year ago to $5.3 billion. For 2008, analysts are looking for earnings of $1.40 per share on revenue of $27.6 billion, down from $2.60 per share and $30.8 billion in the previous year. Alcoa missed earnings estimates in three of the past five quarters, by 25.4% in the third quarter. The consensus recommendation of analysts shifted from buy to hold AA during the past quarter. The share price has been climbing in recent weeks, but it is 65.6% lower than a year ago.

Intel Corp. (NASDAQ: INTC) is also scheduled to report fourth-quarter results this week, one of a handful of tech stocks to do so. The number one semiconductor maker is expected to post earnings down 86.8% to $0.05 per share, and sales of $8.2 billion, down 23.3% from a year ago. Last week, Intel forecast sales for the quarter of $8.2 billion. The full-year numbers are expected to be marginally lower than a year ago, or $0.94 per share on $37.7 billion. Intel only missed earnings estimates in one of the past five quarters. Shares are about $2.00 higher than the 52-week low, but 37.2% lower than a year ago.

The earnings crunch begins in earnest this coming week, with companies from Johnson & Johnson (NYSE: JNJ) and PepsiCo Inc. (NYSE: PEP) to Southwest Airlines Co. (NYSE: LUV) and Harley-Davidson Inc. (NYSE: HOG) scheduled to report results for the quarter just ended. But with the ongoing turmoil in the markets, much attention is on the tech and financial sectors. This week will provide plenty to mull over on both counts.

Wall Street expectations for tech stocks are fairly optimistic. Analysts surveyed by Thomson Financial are looking for chip maker Altera Corp. (NASDAQ: ALTR) and software/service company iGate Corp. (NASDAQ: IGTE) to be the sector's biggest earnings gainers of the week. Altera is expected to report earnings of 30 cents per share (up 33.3% from a year ago) on revenue of $355.1 million. Altera had previously forecast flat sales for the quarter, and shares fell to a 52-week low last week. iGate is expected to report earnings of 14 cents per share (up 42.9%) on revenue of $55.6 million. India-based iGate recently spun off its Mastech consulting services. Shares are down 45.0% in the past three months, and also reached a new 52-week low last week.

San Jose-based Novellus Systems Inc. (NASDAQ: NVLS), on the other hand, is expected to report that net income tumbled 90.4% from a year ago to 4 cents per share, on revenue of $245.6 million. Novellus fell to a 52-week low early last week, and shares are down 44.5% year to date.

MOST NOTEWORTHY:

• Baird upgraded Blackboard (NASDAQ:BBBB) to Outperform from Neutral based on two new state-wide deals with New Mexico and North Carolina, K-12 growth, and up-selling and cross-selling opportunities. The firm raised Blackboard's target to $45 from $38.
  
• Wachovia raised Starwood Hotels (NYSE:HOT) to Outperform from Market Perform citing valuation, high international exposure, and secure capital structure and dividend.
  
• Citigroup upgraded shares of ACE Ltd (NYSE:ACE) to Buy from Neutral on valuation, as they believe additional selling from the company's redomestication to Switzerland will be offset by short covering. They view the recent weakness as an attractive buying opportunity and raised their target to $63 from $58.

• UBS upgraded Microchip (NASDAQ:MCHP) and Linear Tech (NASDAQ:LLTC) to Buy from Neutral.
  
• Marshall & Ilsley (NYSE:MI) was raised to Market Perform from Underperform at Keefe Bruyette.
  
• Comcast (NASDAQ:CMCSA) was upgraded to Buy from Neutral at Goldman.