MOST NOTEWORTHY: Host Hotels, Packeteer and France Telecom were today's noteworthy downgrades:

• Deutsche Bank downgraded shares of Host Hotels (NYSE: HST) to Hold from Buy and lowered their target to $19 from $22.50 on a lack of near-term catalysts and industry headwinds. Note the firm also downgraded Sunstone Hotel Investors (NYSE: SHO), Strategic Hotels (NYSE: BEE) and DiamondRock Hospitality (NYSE: DRH) to Hold from Buy.
• Merriman downgraded shares of Packeteer (NASDAQ: PKTR) to Neutral from Buy following the acquisition bid by Blue Coat Systems (NASDAQ: BCSI) as they are not expecting additional suitors to emerge.
  
• ABN Amro cut France Telecom (NYSE: FTE) to Hold from Buy as they see increased risk from the company's acquisitions strategy.

OTHER DOWNGRADES:

• Keefe Bruyette downgraded Capitol Federal (NASDAQ: CFFN) to Underperform from Market Perform.
  
• Omnicell (NASDAQ: OMCL) was lowered to Neutral from Strong Buy at Broadpoint.
  
• National City (NYSE: NCC) was downgraded at Bear to Underperform from Outperform.

MOST NOTEWORTHY: National City, Syntax Brillian and Medco Health were today's noteworthy upgrades:

• Deutsche Bank upgraded shares of National City (NYSE: NCC) to Buy from Sell on valuation as they believe their $9.00 target is in-line with the company's franchise value.
  
• Baird upgraded Syntax Brillian (NASDAQ: BRLC) to Outperform from Neutral based on recently announced strategic initiatives and valuation.
  
• Jefferies upgraded shares of Medco Health (NYSE: MHS) to Buy from Hold as they believe the company's renewed PBM contract with United Healthcare (NYSE: UNH) removes a major overhang.

OTHER UPGRADES:

• Friedman Billings raised Downey Financial (NYSE: DSL) to Market Perform from Underperform.
  
• Volterra (VNASDAQ: LTR) was raised to Buy from Neutral at Piper.
  
• Alliance Data (NYSE: ADS) was raised at JP Morgan to Overweight from Neutral.

TheStreet.com's Jim Cramer says this lender gave money to anyone with a pulse, and the shareholders are left holding the bag.

For pure laughs, go read the National City (NYSE: NCC) (Cramer's Take) conference call yesterday, the one where they destroyed what was remaining of their common shareholder base with the partial takeunder by Corsair, an unknown private-equity fund that surfaced to inject $7 billion to save the bank.

We have had some remarkably poorly run banks in this go-round of subprime, including Downey Savings (NYSE: DSL) (Cramer's Take) (takers anyone?) Wachovia (NYSE: WB) (Cramer's Take) and Washington Mutual (NYSE: WM) (Cramer's Take), as well as some nonbank fiascos like E*Trade (NASDAQ: ETFC) (Cramer's Take) and CIT (NYSE: CIT) (Cramer's Take).

But this Nat City takes the cake. They have to be the most stupid and least rigorous lender since the S&L crisis. They have $10 billion in home equity loans that have got to be among the worst ever issued. I swear, I bet that many of these are going to turn out to be out-and-out fraud by the borrowers. Miraculously, Nat City found an even more stupid soul, Merrill's (NYSE: MER) (Cramer's Take) Stan O'Neal, to sell its main originator of this junk to, something that brought O'Neal down and almost brought Merrill down. Some would say that the latter is still in question. I have no idea what would have happened to NCC if they hadn't sold it before the height of the fraud, the first quarter of 2007.

Today was an odd day, with technology stocks taking the trump card and dominating most earnings reports. The NASDAQ was the strong index today, although the DJIA and the S&P tried unsuccessfully to erase most of their losses toward the closing bell today. With oil rising every day, you'd think at some point it would affect things. Not yet. Here are the unofficial closing bell prices for major US index levels:

• DJIA 12,822.41 (-26.95; -0.21%)
• S&P500 1,388.06 (-2.27; -0.16%)
• NASDAQ 2,408.04 (+5.07; +0.21%)
• 10YR-TBOND 3.712% (-0.031)
• 52-WEEK LOWS

Amylin Pharmaceuticals, Inc. (NASDAQ: AMLN) reported first quarter losses of $68.8 million, or $0.51 EPS, wider than the $49.4 million in the first quarter of 2007. Losses are credited to a drop in sales in diabetes treatment, Byetta, a drug they co-market with Eli Lilly (NYSE: LLY), and increased expenses. Analysts estimated losses of $0.47 EPS. The 52-week range is $23.75 to $53.25. Shares were down over 10% at $28.13 in the final minutes of trading today.

After Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER) reported earnings, there was at least some hope that the worst was behind the banking and brokerage industries. But that may not be true. Over the weekend Royal Bank of Scotland (NYSE: RBS) said it might have to raise $12 billion. Then there is today's news from big Midwestern bank National City Corp. (NYSE: NCC).

NCC will probably announce that it has raised over $6 billion. According to The Wall Street Journal, "the Cleveland-based regional bank was hammering out final terms of the transaction with a group of investors led by Corsair Capital LLC, a New York private-equity group."

Current NCC stockholders will be beaten to death. The new capital will come in at $5 a share. The stock trades at over $8 now. NCC's 52-week high is over $38.

The news is another example of how management at banks doomed their shareholders. Financial companies took on huge amounts of subprime-backed paper. The investments looked safe, but, on closer examination, they carried great risks if the housing market began to falter. The underlying assumption was that home prices would move up forever and that mortgages had been granted to consumers at reasonable rates. Both of those assumptions were wrong.

When something looks too good to be true, it usually is.

Douglas A. McIntyre is an editor at 247wallst.com.

National City Corp. (NYSE: NCC) is recently trading at $7.50 in pre-open trading, below its close of $8.33. The Wall Street Journal reported that NCC is close to a $6 billion cash infusion from private equity. Sandler O'Neill says while the potential deal announcement is not surprising, "the size and the dilution still seems astonishing."

NCC May option implied volatility of 140 is above its 26-week average of 66 according to Track Data, suggesting larger price fluctuations.

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

MAJOR PAPERS:

• Private equity firm Corsair Capital and several of the banks bigger shareholders are expected to inject over $6B into Cleveland regional bank National City Corporation (NYSE: NCC), the Wall Street Journal reported.
• According to sources, the Financial Times reported that Bank of America Corporation (NYSE: BAC) is planning to sell a portion of its 9% stake in China Construction Bank in order to raise capital. However, Bank of America will offset some of the share sales by exercising options it holds to buy additional stakes in the bank at levels that are now well below market rates.

OTHER PAPERS:

• The UK Times said The Royal Bank of Scotland Group Plc (NYSE: RBS) confirmed that it is considering a rights issue that is expected to raise up to GBP10B for the British bank.
• The UK Telegraph reported that the BBC is talking to private equity firms to join in a bid for Virgin Media Inc's (NASDAQ: VMED) Virgin Media Television, which owns a percentage of the UKTV content business that the BBC doesn't already own.

TheStreet.com's Jim Cramer says the good stuff out there -- and there's a lot of it -- will keep us going up.

How high can we go? That's pretty much the only question worth asking after you put in a bottom, as we did after the Bear Stearns (NYSE: BSC) (Cramer's Take) collapse.

Nobody's talking about a new bull market. But let me give you some thoughts about what has happened in the past few weeks to make it so that you could become more positive.

First, we went down so much because the systemic risk in the biggest part of the S&P, the financials, was overwhelming. It is why we "overcorrected" because the market feared -- and shorts pressed their bets -- that the following institutions could go under: Bear Stearns, Washington Mutual (WM) (Cramer's Take), Wachovia (WB) (Cramer's Take) -- yes, Wachovia, because of the miserable buy of what turned out to be a really reckless lender, Golden West -- Lehman Brothers (LEH) (Cramer's Take), Merrill Lynch (MER) (Cramer's Take), Citigroup (C) (Cramer's Take), National City (NCC) (Cramer's Take), Capital One (COF) (Cramer's Take) and even Wells Fargo (WFC) (Cramer's Take). Fannie (FNM) (Cramer's Take) and Freddie (FRE) (Cramer's Take), too.

It would be easy to try to put the blame game on the massively high import prices or the crummy University of Michigan numbers released this morning, but frankly there is no point. Elaine Chao at the Labor Department got a "critic's pass" today because there are more important fish to fry. General Electric Co. (NYSE: GE) was such a disappointment that their quarter could have been a C-Rated low budget slasher film. It really looks like doing the exact opposite of what feels good is the right trade. Below are the unofficial closing levels for major US index levels:

DJIA 12,328.68 (-253.30; -2.01%)
S&P 500 1,333.18 (-27.37; -2.01%)
NASDAQ 2,290.24 (-61.46; -2.61%)
10YR-TBond 3.471% (-0.061)
Major list of 52-week lows

National City (NYSE: NCC) closed at $9.79 Thursday.

The WSJ reported Fith Third Bancorp (NYSE: FITB) is considering a bid to purchase NCC according to people familiar with the situation.

NCC announced on April 1 that its Board of Directors are reviewing a range of strategic alternatives for the company.

FITB has $110 billion in assets. NCC has $150 billion in assets.

NCC May option implied volatility of 110 is above its 26-week average of 58 according to Track Data, suggesting larger price fluctuations.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

MOST NOTEWORTHY: Lululemon, National City and Devon Energy were today's noteworthy upgrades:

• Thomas Weisel upgraded shares of Lululemon (NASDAQ:LULU) to Overweight from Market Weight as they believe the company's momentum continues following the strong results; the firm maintains a $43 target on shares.
  
• Bear upgraded National City (NYSE:NCC) to Outperform from Underperform citing favorable risk/reward following reports is is considering a transaction with KeyCorp (NYSE:KEY).
  
• JP Morgan raised Devon Energy (NYSE:DVN) to Overweight from Neutral citing solid organic growth with high rates of returns.

OTHER UPGRADES:

• Micron (NYSE:MU) was upgraded at Goldman to Neutral from Sell.
  
• Merrill raised eBay (NASDAQ:EBAY) to Buy from Neutral.
  
• Oppenheimer upgraded to Outperform from Perform Marathon Oil (NYSE:MRO).

Before the bell: Slow start on Wall Street as Bernanke heads back to Capitol Hill: RIMM, CSCO

National City (NYSE: NCC) was upgraded to Equal Weight from Underweight at Morgan Stanley due to valuation and the possibility the bank could be bought. The broker reiterated its $10 price target.

After Research in Motion (NASDAQ: RIMM) reported such strong earnings and sales Wednesday, many believe it was Apple Inc. (NASDAQ: AAPL)'s iPhone that was partly responsible for that. Some say that the introduction of the iPhone in June brought attention to smartphones. Meanwhile, there are reports that there is a shortage of iPhones in Apple's stores in the U.S. Many speculate Apple may be phasing out the existing models in preparation for new ones to work on 3G netwroks.

General Motors (NYSE: GM) - According to The Wall Street Journal, GM may take on more of parts maker Delphi's pension liabilities as it tries to help it emerge from Chapter 11 bankruptcy protection. It's interesting to hear this especially two days after GM posted 19% decline in sales in March compared to a year ago period. How can the already struggling automaker, seeing its sales drop that much, take on such a liability?

Morgan Stanley upgraded National City (NYSE: NCC) from "underweight" to "equal weight," according to MarketWatch.

Oppenheimer has upgrade Marathon Oil (NYSE: MRO) to "out-perform" from "perform," according to Briefing.com. The financial news service also reports that Ebay (NASDAQ: EBAY) has been upgraded to "buy" from "neutral" at Merrill Lynch.

Douglas A. McIntyre is an editor at 247wallst.com.

As if Cleveland needed any more trouble, the two leading banks in the city are rumored to be considering a merger or even an outright sale. According to The Wall Street Journal, KeyCorp. (NYSE: KEY) may acquire National City Corp. (NYSE: NCC). Buyout firm Kohlberg Kravis Roberts & Co. could provide the capital for the buyout.

National City has had a difficult few months. The bank has a lot of exposure to the subprime mortgage market, and the company's stock has dropped from the mid $30s to about $10 in the last year. Although National City has a $1 billion stake in Visa (NYSE: V), it has laid off over 3,000 workers recently, and is likely to reduce staff even further. An acquisition by neighbor KeyCorp. would no doubt guarantee many more firings -- or "redundancies," as they say in Britain.

So far, these rumors are good news for KeyCorp, which is up nearly 5% to $24.66. For National City, it's a different story, with the stock down nearly 2% to $9.78. I guess the market thinks KeyCorp. will pick up some decent assets at fire sale prices. Let's hope that this isn't another mistake by the lake.

National City (NYSE: NCC) is mulling plans to sell itself to KeyCorp (MYSE: KEY) according to the WSJ.

NCC announced on April 1 that its Board of Directors are reviewing a range of strategic alternatives for the company. NCC closed at $9.99.

RBC Capital says: "We would be surprised if the company will receive acceptable bids for the entire corporation considering its high exposure to higher risk assets."

NCC April option implied volatility of 122 is above its 26-week average of 57 according to Track Data, suggesting larger price fluctuations.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com