Analyst Upgrades

• Deutsche Bank upgraded United Parcel Service (UPS) to buy from hold on expectations the company will benefit from improving international package volumes and restructuring initiatives. The firm raised its target on shares to $70 from $67.
• JPMorgan upgraded SVB Financial (SIVB) to overweight from neutral on valuation following the recent pullback in shares. The firm has a $54 price target on the stock.
• Baird upgraded ArvinMeritor (ARM) to outperform from neutral and raised its target to $15 from $12 following the Q2 report. The firm said ArvinMeritor has transformed its business model and is well-positioned for growth.
• UBS (UBS) was upgraded to overweight from neutral at JPMorgan.
• Occidental Petroleum (OXY) was upgraded to conviction buy from buy at Goldman.
• Vail Resorts (MTN) was upgraded to outperform from market perform at Wells Fargo.

Hershey (HSY) had some positive news for shareholders today. According to the company's fourth-quarter report, net income increased a little under 7% to 63 cents per diluted share. That was three pennies better than expectations, as Earnings.com indicates.

It's good to come in ahead of estimates, but even better, management saw fit to increase the quarterly payout on the common stock by well over 7%. Shareholders will now get 32 cents per share every three months. As much as I enjoy an earnings beat, I love dividend increases even more. Sure, they might not mean much to traders, but for individuals who actually own stocks for purposes of building core portfolios, this is sweet news.

Analyst Upgrades

• Jefferies upgraded Netflix (NFLX) to buy from hold and has a $65 target, citing stronger than expected momentum following the Q4 report and guidance. Merriman upgraded Netflix to buy from neutral following the company's better-than-expected Q4 results as it sees upside in shares to the $66 to $75 range. Shares were also upgraded to buy from underperform at BofA/Merrill.
• Citigroup upgraded Rockwell Automation (ROK) to hold from sell following the company's better-than-expected Q1 results and raised FY10 guidance. Citi raised its target on shares to $52 from $35.
• Deutsche Bank upgraded Textainer (TGH) to buy from hold to reflect improved container fundamentals and potential fleet growth. The firm keeps a $19 price target on shares.
• STMicroelectronics (STM) was upgraded to neutral from underweight at Piper Jaffray.
• Caterpillar (CAT) was upgraded to neutral from sell at UBS.
• Apache (APA) was upgraded to outperform from market perform at Wells Fargo.

Kraft Foods (KFT) agreed a deal to buy Cadbury (CBY) for around 11.9 billion pounds ($19.6 billion), creating the world's top confectioner. Kraft had to increase its offer, injecting more cash into the bid to win over the 186-year-old Cadbury, which has finally surrendered its independence and accepted the sweetened offer.

Kraft's offer is 840 pence per Cadbury share, with shareholders also getting a 10 pence special dividend, bringing the offer to a total of 850 pence per share. The new bid has won unanimous recommendation from the Cadbury board. Cadbury shares hit a record high of 838 pence in early trade in London and jumped over 5% to $54.63 in premarket trading.

Kraft Foods (KFT) said it has agreed to acquire Cadbury (CBY) for 11.9 billion pounds or $19.5 billion. Kraft said it will pay 500 pence and 0.1874 of its own shares for every Cadbury share, or the equivalent of roughly 840 pence a share in total. In addition, Cadbury holders will receive a dividend of 10 pence a share. February call option implied volatility is at 35, March call volatility is at 31, versus its 26-week average of 26, according to Track Data, suggesting larger price movement.

CBOE Volatility Index (VIX) at 17.90; 10-day moving average is 18.49.

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

U.S. stock futures were slightly lower Tuesday morning as investors returned from a long weekend ready for earnings season to get in full swing with Citigroup (C) and IBM (IBM) reporting Tuesday. Also, several mergers greeted traders, including, finally a $19.5 billion offer for Cadbury by Kraft Foods.

On Friday, U.S. stocks fell after JPMorgan Chase & Co (JPM) reported better-than-expected results, that included, however, deep fourth-quarter loan losses. Also, a consumer sentiment survey was weaker-than-expected as consumers were increasingly concerned about income and employment.

Today was a day which could have gone either way. The data was light and the market is on hold for earnings. But Congressional inquiries today with top bank executives did not have an angry nor threatening tone as you have seen in other unrelated hearings of the past. This helped the financial sector and the market. The Fed's Beige Book also gave no end in sight for near-zero rates.

Here are today's unofficial closing bell levels:

Dow 10,680.77 +53.51 (0.50%)
S&P 500 1,145.68 +9.46 (0.83%)
Nasdaq 2,307.90 +25.59 (1.12%)

Top Day Trader Alert Stocks
Top Analyst Upgrades & Downgrades
Secondary Stock Offerings

In the massive cross-border hostile takeover battle, Cadbury (CBY) again said "no" to Kraft's (KFT) $16.91 billion offer. Although, in buyout-speak, the response was in a press release that called the deal "fundamentally unattractive" and even "derisory" (yes, the attorneys have spent time at the thesaurus).

Why the rebuff? Cadbury reported a healthy 2009 and expects the good times to continue into 2010. In other words, a buyout is not necessarily evil -- that is, so long if the price is right.

Early Tuesday morning, Kraft Foods (KFT) announced that it is going to sell its North American pizza business for $3.7 billion. And of course, the natural purchaser of the pizza business is Nestle -- wait a sec ...

What does Nestle want with KFT's frozen pizza business? Well, in case you didn't know it, Nestle already holds the Stouffer's, Lean Cuisine, Buitoni, Hot Pockets, and Lean Pockets brands. The Swiss company will now add DiGiorno, Tombstone, California Pizza Kitchen, Jack's, and Delissio brands to its prepared dishes lineup. This addition is a major coup for Nestle, as its presence in the prepared-food world was already substantial -- and is now downright formidable. I would have to say that this is $3.7 billion well spent by Nestle.

Stocks are poised to open mixed on Tuesday as investors digest yesterday's big gains and the latest bit of economic data. The three major U.S. stock indexes were largely flat ahead of the start of trading on Wall Street. The Dow industrials and S&P 500 were each up about a point, while the tech-heavy Nasdaq was down slightly.

More economic data is to be released today, including a report by the Commerce Department on November factory orders due at 10 a.m. Eastern time. Consensus estimates call for a 0.1% rise for the month, according to Briefing.com. At about the same time the National Association of Realtors will release data on existing home sales for November. Expectations are that sales slipped 2% in the month, following a 3.7% rise in October.

IBM (IBM) closed at $130.57. IBM is expected to report Q4 EPS on Jan. 19. January option implied volatility is at 16, February is at 21, April is at 22; below its 26-week average of 24 according to Track Data, suggesting decreasing price movement.

Cadbury PLC (CBY) closed at $50.81. The European Commission's has a Jan. 6 deadline for reviewing Kraft's (KFT) plan to buy CBY. Cadbury, the world's second largest confectioner, rejected Kraft's buyout bid in November. Hershey (HSY) and Italy's Ferrero have said they are considering rival offers for Cadbury. January call option implied volatility is at 26, puts at 29, March volatility is at 27; verses its 26-week average of 27, according to Track Data.

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

After reading an unbelievable sell recommendation by one of my BloggingStocks colleagues, I didn't know whether to laugh or cry. In Thirteen Dow stocks that are doomed, we are informed that 13 of the 30 are going down and we should all bail out before it is too late.

I find this silly on many levels. For one, 13 stocks amount to a large-cap index fund and since large-cap stocks have lagged the market the probability that they will outperform going forward is real and has many investors promoting them.

This morning, Cadbury (CBY) lifted its sales and margin forecasts. Some believe this is a move to stop a hostile takeover from Kraft (KFT). Cadbury upped its sales and margin forecasts to reflect organic revenue growth of 5% to 7% a year during the next four years. This forecast is up from its previously forecast range of 4% to 6%. Cadbury also believes it will have improved margins of 16% to 18% by 2013.

Cadbury chairman Roger Carr told shareholders, "Kraft is trying to buy Cadbury on the cheap to provide much-needed growth to their unattractive low-growth conglomerate business model. Don't let Kraft steal your company with it derisory offer."

Kraft (KFT) had hoped to win Wall Street's attention by pursuing Cadbury, but instead it has come across as wishy-washy in a bid that may never come to fruition.

And rather than growing, Kraft may actually be shrinking now that rumors are circulating that the company is shopping around its Maxwell House coffee brand. Obviously, a good company should be growing and not shrinking.

Next: Dog of the Dow #10: McDonald's (MCD)

Broader economic indicators like GDP and housing numbers seem to be pointing up lately. But despite this, the Dow 30 are stuck in a death spiral. This arbitrary index of outdated stocks is a poor sample of Wall Street right now and just can't seem to get its act together.

Investors who place so much emphasis on the Dow Jones Industrial Average do so at their own peril. Not only are the Dow 30 very disconnected from Wall Street and the broader U.S. economy, this lineup also contains some of the worst stocks out there right now.