cme

Analyst upgrades:

• Jefferies upgraded Xilinx (NASDAQ: XLNX) to Buy from Hold and raised its target to $22 from $17 on valuation and the company's "diversified" business.
  
• Barclays expects Steel Dynamics (NASDAQ: STLD) to outperform in Q1 as investors become more comfortable with the company's balance sheet. Shares were upgraded to Overweight from Equal Weight.
  
• Keefe Bruyette upgraded Asset Acceptance (NASDAQ: AACC) to Market Perform from Underperform on valuation but lowered their target to $6 from $8.
• Blackrock (NYSE: BLK) and Intercontinental Exchange (NYSE: ICE) were added to Goldman's Conviction Buy List.
  
• Lattice (NASDAQ: LSCC) was upgraded to Equal Weight from Underweight at Morgan Stanley.

Analyst downgrades:

The Fed's putting pressure on various exchanges to set up a clearinghouse for credit default swaps. That's the "news" this morning. News is in quotes because, first, the exchanges all want to do this, and they have wanted it for months. They need the revenue. Second, we want more than one exchange so there is competition in pricing and we don't want a sweetheart deal by a government so prone to sweetheart deals that I want to vomit every day I come to work.

Third, this is a regulatory issue and it should be done by some superbody - but please not the easily lobbied-Commodity Futures Trading Commission, which will make you put no margin down because then the fees will be huge from trading. And please not the Securities and Exchange Commission, which doesn't understand markets and has blessed a world where these are under deep cover.

Frankly, as much as I want a clearinghouse on this stuff, I don't think it is possible with these sets of regulators to get a fair one. They are just too easily lobbied by the bad guys to do the wrong thing.

And who would be the worst at this? Tim Geithner and his merry band of "everything we do is right" Federal Reserve folks. I was listening to the TV Thursday and some host was asking some guest how she thought Federal Reserve Chairman Ben Bernanke was doing. She said "he's done a great job." And I found myself thinking, you have to be kidding, you can't possibly believe that, how could anyone think this guy has done a great job?

Anyway, he and Tim "Mr. Let-Me- Call-the-Media-and-Get-a-Good-Story- About-us-Because-I am-Savvy-and-I- Know-How-They-Care-About-the-Call- Back-and-Will-Praise-US" Geithner" (long and deserving hyphenated nickname) would be without a doubt the worst two to be involved in this credit default swap market because they don't play dirty and don't know how the game works. One of the reasons we are in such a jam is that SEC Chairman Christopher Cox has huge faith in the market and Bernanke has huge faith in the power of debate with people like Dick Fisher, the totally discredited Texas Fed man who was saying that inflation is the issue and it is out of control as the greatest wave of deflation overwhelms us since 1932. Fisher's an arrogant and erudite one-man wrecking crew of this economy.

If the Fed is pressuring for these exchanges then we are really in trouble.

I wonder if they even realize that Oct, 21, the day of the Lehman reckoning when we give the Wall Street gangsters their pay off on their hit jobs on Lehman, will cause the federally owned AIG (NYSE:AIG) write gigantic checks and will also reveal who guaranteed this stuff. It will most likely be lots of institutions the Fed doesn't understand or doesn't know.

TheStreet.com's Jim Cramer says the end-of-day bounce was just shorts afraid of a worldwide rate cut.

The shorts must have just gone on "ease watch." You can tell what that is. Some devastating news will come out, say, about once-proud Royal Bank of Scotland (NYSE: RBS) (Cramer's Take), some ratings downgrade, and boom, Britain is hit for a full percentage point decline. Then, as if by magic, it rallies almost back to unchanged as the shorts don't want to be hung before worldwide rate cuts.

I always thought this behavior was curious because I don't know of a short-seller who thinks that intervention even matters, or says it doesn't matter, for that matter!

In fact, though I think it can matter not so much to our country, it does matter to those countries in Europe that really would be doing well if money weren't so tight. Our markets lost a ready source of cash and business when Europe went away, particularly upon the disappearance of China from the world's economies.

Now, of all of the new measures I like hearing, the commercial paper intervention is intriguing as the government substitutes itself for buyers for this important funding. But again, I come back to the notion that we can't really be two sides of everything, can we?

CME Group (NASDAQ: CME - option chain) is one of the few stocks rising today after an article in the latest Barron's called CME one of its top picks to weather the current storm, because it can generate a lot of cash in a tight credit environment. Even if CME doesn't rise in the next few months, this kind of sentiment could help the stock at least maintain its current price. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CME.

CME opened this morning at $358.00 So far today the stock has hit a low of $353.63 and a high of $384.99. As of 12:35, CME is trading at $371.00, up $8.70 (2.4%). The chart for CME looks neutral and S&P gives CME a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $280 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.5% return in just two weeks as long as CME is above $280 at October expiration. CME would have to fall by more than 24% before we would start to lose money. Learn more about this type of trade here.

CME hasn't been below $282 at all in the past year and has shown support around $350 recently.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in CME.

Analyst upgrades:

• Citigroup raised Ann Taylor (NYSE: ANN) to Hold from Sell. The firm upgraded shares following the company's Q2 upside and believes guidance for the second half of 2008 is appropriately conservative.
  
• Jefferies upgraded China Sunergy (NASDAQ: CSUN) based on valuation,and improved liquidity and silicon supply outlook.
  
• Stephens upgraded infoUSA (NASDAQ: IUSA) shares to Overweight from Equal Weight to reflect the stock's valuation, new management, improvements in expense controls and the potential to become a takeover target.
  
• Citigroup raised BB&T (NYSE: BBT) to Buy from Hold.
• Stifel upgraded Leggett & Platt (NYSE: LEG) to Buy from Hold.

Analyst downgrades:

• Citigroup downgraded Cablevision (NYSE: CVC) to Sell from Buy as they do not expect the company's structural moves to unlock value.
  
• Wachovia dropped Knight Transportation (NYSE: KNX) to Market Perform from Outperform based on valuation.
  

Chicago Mercatile Exchange (NYSE: CME) shares are soaring higher today after the company reported a second-quarter profit of $201 million, or $3.67 per share. Excluding one-time costs, CME earned $3.93 per share, beating analysts' estimates of $3.85 per share. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CME.

After hitting a one-year high of $714.48 in December, the stock hit a one-year low of $282.00 last week. CME opened this morning at $328.99. So far today the stock has hit a low of $326.67 and a high of $349.80. As of 12:50, CME is trading at $344.28, up $18.75 (5.8%). The chart for CME looks bearish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.

For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $280 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 4.2% return in just four weeks as long as CME is above $280 at August expiration. CME would have to fall by more than 18% before we would start to lose money. Learn more about this type of trade here.

MOST NOTEWORTHY: S1 Corp, CME Group and Elizabeth Arden were today's noteworthy upgrades:

• Stephens upgraded shares of S1 Corp (NASDAQ: SONE) to Overweight from Equal Weight after meeting with management to reflect their increased confidence in the company's ability to execute. The firm maintains a $9 target on the stock.
  
• Citigroup upgraded shares of CME Group (NYSE: CME) to Buy from Hold as they find the risk/reward attractive with volumes picking up and consensus estimates at more rational levels. The firm maintains a $485 target.
  
• Oppenheimer raised Elizabeth Arden (NASDAQ: RDEN) to Outperform from Perform on valuation, as they believe the current share price does not adequately reflect potential earnings accretion from the company's licensing agreement with Liz Claiborne (NYSE: LIZ) or restructuring savings.

OTHER UPGRADES:

• Double Hull Tankers (NYSE: DHT) was raised to Neutral from Underweight at JP Morgan.
  
• Hovnanian (NYSE: HOV) was upgraded at UBS to Neutral from UBS.
  
• BMO Capital upgraded Xyratex (NASDAQ: XRTX) to Outperform from Market Perform.

CME Group (NYSE: CME) shares are falling after competitor NYSE Euronext (NYSE: NYX) reported a first-quarter profit above analysts' estimates. CME's earnings that disappointed investors two weeks ago look even worse in light of NYX's good results this morning. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CME.

After hitting a one-year high of $714.48 in December, the stock hit a one-year low of $399.01 in March. This morning, CME opened at $487.00. So far today the stock has hit a low of $476.27 and a high of $487.65. As of 12:40, CME is trading at $481.03, down $8.32 (-1.7%). The chart for CME looks neutral but improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $550 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in six and a half weeks as long as CME is below $550 at June expiration. CME would have to rise by more than 14% before we would start to lose money. Learn more about this type of trade here.

Well, there seems to be one healthy part of the financial system – that is, the exchanges. Actually, this week, we got another mega deal: CME Group (NYSE: CME) has agreed to pay $9.3 billion for NYMEX Holdings (NASDAQ: NMX).

Yes, the CME is already the world's largest futures marketplace. But with the Nymex, there will be some extra heft with oil, natural gas and gold futures (all of which, of course, have been torrid).

No doubt, the CME has shown a big appetite for deals. After all, in the middle of last year, the firm purchased the venerable CBOT for a cool $12 billion.

Interestingly enough, the NYMEX has a major footprint in the over-the-counter derivatives marketplace, which has been a money maker. Yet, as seen with the implosion at The Bear Stearns Companies, Inc. (NYSE: BSC) and a variety of major hedge funds, it seems that this market is undergoing some scrutiny.

However, integration of the deal should be a fairly smooth process since the NYMEX already uses the CME Globex platform. What's more, the merger is expected to result in annual cost savings of about $60 million.

But Wall Street definitely has concerns. On the news of the deal, the CME's stock fell 7.58% to $449.20.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

TheStreet.com's Jim Cramer says these loved and hated stocks aren't likely to fall until January.

First Solar (NASDAQ: FSLR) (Cramer's Take), CME (NYSE: CME) (Cramer's Take), Intuitive Surgical (NASDAQ: ISRG) (Cramer's Take) and MasterCard (NYSE: MA) (Cramer's Take) are amazing stocks.

They are loved and hated. MasterCard is constantly being sold because it is supposed to be a consumer-spending play. It is not a consumer-spending play; it is a play on the increasing use of plastic over cash worldwide and on the possibility of a fee increase next year, even as the company has been so conservative as to let you think fees are going down. The fact that it isn't down despite Capital One (NYSE: COF) (Cramer's Take) and American Express (NYSE: AXP) (Cramer's Take) shows me maybe some people are getting this distinction.

MOST NOTEWORTHY: NutriSystem, Under Armour, CME Group, Air France ADS and Kilroy Realty were today's noteworthy upgrades:

• NutriSystem (NASDAQ: NTRI) was upgraded to Strong Buy from Buy at Broadpoint on valuation, as they believe all concerns are overdone.
  
• Think Equities upgraded Under Armour (NYSE: UA) to Buy from Accumulate on valuation.
  
• Wachovia upgraded CME Group (NYSE: CME) to Overweight from Market weight, as they expect fed income volumes to benefit from a more active Federal Reserve.
  
• Goldman added Air France (NYSE: AKH) to its Pan-European Conviction Buy List citing valuation following the recent sell-off.
  
• Citigroup upgraded shares of Kilroy Realty (NYSE: KRC) to Buy from Hold on valuation, as they believe concerns are overblown and the company's underleveraged balance sheet can drive growth.

OTHER UPGRADES:

• UBS raised SXC Health Solutions (NASDAQ: SXCI) to Buy from Neutral.
  
• Think Equities upgraded Symantec Corporation (NASDAQ: SYMC) to Accumulate from Source of Funds.
  
• DA Davidson & Co upgraded Texas Industries (NYSE: TXI) to Buy from Hold.
  
• Lehman upgraded Intersil Corporation (NASDAQ: ISIL) to Equal Weight from Underweight.
  
• Keefe Bruyette upgraded SEI Investments (NASDAQ: SEIC) to Outperform from Market Perform.

MOST NOTEWORTHY: The exchange sector, Progenics Pharma, Tyco Electronics and PharMerica were today's noteworthy initiations:

• Keefe Bruyette initiated coverage on Exchange Sector: The firm started shares of CME Group Inc (NYSE: CME), NYMEX Holdings Inc (NYSE: NMX) and NYSE Euronext Inc (NYSE: NYX) with Outperform ratings and a $669 target, $147 target and $90 target, respectively. The firm also started shares of Investment Technology Group (NYSE: ITG), Nasdaq Stock Market Inc (NASDAQ: NDAQ) and IntercontinentalExchange Inc (NYSE: ICE) with Underperform ratings and a $47 target, $36 target and $158 target, respectively, and shares of Knight Capital Group (NASDAQ: NITE) with an Underperform rating and $13 target.
  
• Progenics Pharmaceuticals (NASDAQ: PGNX) was added to Friedman Billings' Top Picks list and its Outperform rating was maintained. The firm has a high degree of confidence in the success of the MNTX Ph III studies in post-operative ilieus, as well as the FDA approval of the subcutaneous injection in terminally ill patients with opiod-induced constipation around the 1/31/07 PDUFA date.
• RBC believes margin expansion will drive long-term appreciation in Tyco Electronics Ltd (NYSE: TEL) and started shares with an Outperform rating and $41 target.
• PharMerica Corporation (NYSE: PMC) was initiated with an Underperform rating at Bear Stearns. The firm believes PMC will be pressured by customer losses and generic reimbursement cuts and sees shares trading in $12-$13 range.

OTHER INITIATIONS:

• Ryanair Holdings (NASDAQ: RYAAY) was initiated with a Market Outperform rating at Avondale.u
• Banc of America initiated shares of Town Sports International (NASDAQ: CLUB) with a Sell rating and $15 target.
  
• Goldman started shares of Genesis Lease Ltd (NYSE: GLS) and Aircastle Ltd (NYSE: AYR) with Neutral ratings.

I usually tend to favor the study and analysis of value-oriented professional portfolios over growth-oriented one. After the past week's volatility, however, I've seen many growth stocks begin to offer buying opportunities.
[Image source: InvestorPlace.com.]

Louis Navellier is a very well-known growth investor who writes the Blue Chip Growth newsletter and manages Navellier & Associates, a $4.5 billion fund focused on finding stocks that "should contribute significantly to overall portfolio outperformance against relative benchmarks."

Because the fund owns so many stocks, I'm only going to focus on Navellier's favorite industries, or themes, and the favorite ideas within each one. If you read through Navellier's 'position sheet,' it should become pretty apparent that the several themes he's currently riding in the market, are big tech, exchanges and oil service companies

On tonight's Mad Money on CNBC, Jim Cramer talked up his DJIA target of 14,582 at year-end and DJIA components (Cramer did this in batches before with individual targets: A-B group, then some middle names, and another group). He also said he's backing the Chicago Mercantile Exchange, or the CME Group, Inc. (NYSE:CME). He thinks this will benefit hugely from the increased volume and the increased volatility in futures. This is one he thinks that can raise fees because they are so large in market share now that the CME/CBOT merger went through. He even said this may be a secular growth story and even thinks the stock is cheap. The company now has accelerating revenue growth for growth managers, and he thinks estimates could be too low.

Let's hope THIS exchange pick from Cramer does better than his pick of the shares in the New York Stock Exchange, or the NYSE Euronext (NYSE: NYX), which was Cramer's #1 Growth Pick for 2007. This quarter did actually look OK for the NYSE, but at under $75.00 shares are still way off of yearly highs of $112.00. CME has a lot of integration work remaining for the CME/CBOT merger, but after having personally officed in the CBOT Building and spending a lot of time over at the CME Building (and maybe even a few happy hours at each, allegedly) these did create the monster exchange. The combined entity will also force other exchange mergers even if for no other reason than survival or relevance.

MOST NOTEWORTHY: Today's noteworthy downgrades involved Hilton Hotels Corp (HLT), TransAlta Corp (TAC), Cascade Corp (CAE), Activison (ATVI) and Atheros Communications (ATHR):

• Stifel downgraded Hilton Hotels (NYSE: HLT) to Hold from Buy at Stifel based on the recent acquisition.

• TD Newcrest cut TransAlta (NYSE: TAC) to Sell from Hold and doesn't consider an LBO of the company likely.

• Rodman cut Cascade (NYSE: CAE) to Market Underperform from Market Perform based on valuation.

• Activision (NASDAQ: ATVI) was downgraded to Neutral from Outperform at JP Morgan based on valuation and the competitive environment.

• AG Edwards believes Atheros Communications (NASDAQ: ATHR) has a less favorable risk/reward and cut shares to Hold from Buy...

OTHER DOWNGRADES:

• Needham downgraded Kyphon (NASDAQ: KYPH) to Buy from Strong Buy.

• UBS downgraded Taiwan Semiconductor (NYSE: TSM) to Neutral from Buy.

• Deutsche Bank cut Chicago Mercantile Exchange Holdings (NYSE: CME) to Hold from Buy.

• Roche Holding Ltd (OTC: RHHBY) was downgraded to Hold from Buy at Citigroup.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).