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For now, I'm placing a Hold on Valero Energy Corp. (NYSE: VLO) shares, first recommended on April 20, 2009 at a price of $20.08.

Valero, the largest, independent refiner in North America, continues to underperform, as a result of the decline in demand for refined products triggered by the recession.

U.S. stock futures drifted higher Tuesday morning, pointing to a somewhat flat beginning on Wall Street this morning after yet another sell-off day Monday despite a series of strong earnings releases. Investors await several economic releases due out this morning, including housing and consumer confidence, looking for direction.

Economic releases this morning include September durable goods orders at 8:30 a.m. Eastern, which is expected to have risen. At 9 a.m., the August Case-Shiller Home Price Index is due out. Prices are expected to have continued their slide. At the same time, October's Conference Board reading on consumer confidence will be released. Economists expect confidence has improved slightly.

Valero Energy (NYSE: VLO) has underperformed, but I'm nevertheless Reiterating my Buy rating for the company, first recommended on April 20, 2009 at a price of $20.08. Here's why:

True, gasoline demand has lagged due to the recession, but that trend is expected to end, as lay-offs decline with the U.S. economic recovery.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Alcatel-Lucent (NYSE: ALU) reported a surprise profit but is expected to return to losses next quarter.
• Coach Inc. (NYSE: COH) profit and revenue were in line with expectations, sending shares lower.
• Corning Inc. (NYSE: GLW) posted better-than-expected earnings but other concerns drove down shares.
• eHealth Inc. (NASDAQ: EHTH) reported solid Q2 numbers but Wall Street was not impressed.
• Goodyear Tire & Rubber Co. (NYSE: GT) posted a smaller-than-expected Q2 loss, sending shares higher.
• JAKKS Pacific Inc. (NASDAQ: JAKK) reported swinging to a Q2 net loss and revenues were flat.

TheStreet.com's Jim Cramer says the stocks seem to move in lock step despite varying degrees of success.

Oils are not equal, even though they trade together. This morning Shell (NYSE: RDS.A) (Cramer's Take) reported profits down 67%, which is 15 points more than BP (NYSE: BP) (Cramer's Take), and this matters. Conoco (NYSE: COP) (Cramer's Take) was just disastrous, down 76%, with the worse combination of bad refining and horrid natural gas numbers. Yet they are all pretty much treated equally. Meanwhile, Chevron (NYSE: CVX) (Cramer's Take) gave you a 4.6% increase in the dividend, something they hinted they could do because of the great growth of output that is hitting now. Reserves are growing.

I am hoping that these become de-ETF'd, meaning that they can trade on their own so stock-picking matters again. That's what's happening, for example, with the banks, where a different kind of reserves is distinguishing the players.

Today was a dud from the start as profit takers were in there unloading gains as the impatient buyers try to gradually build positions in stocks they feel they have missed. For an earnings season trading day, this was a low-impact day. There was some negative consumer confidence data, but the Case-Shiller data showed signs that home prices are stabilizing.

Here are today's unofficial closing bell levels:

Dow 9,096.42 -12.09 (-0.13%)
S&P 500 979.60 -2.58 (-0.26%)
Nasdaq 1,975.51 +7.62 (0.39%)

Top Upgrades and Downgrades

U.S. stock futures declined Tuesday morning after managing to close higher on Monday to extend the remarkable rally in the markets in the last two weeks. Today, more earnings are on tap, and investors will also focus on housing data coming out before the opening bell. Finally, there is a hearing about the energy trading that would be of interest to investors.

What on many investors' minds these past recent days is how long will the rally continue. The market, on Monday, on the one hand showed resilience following some disappointing earnings and pressures from sellers trying to cash in profits. On the other hand, the surprise climb in housing sales perhaps should have triggered a more convincing positive performance. While no doubt some would want to take some profit of the table in the coming days, more positive news from corporate results to economic data indicating a better third quarter could sustain markets.

Valero Energy (NYSE: VLO) closed at $18.31. VLO is expected to report Q2 EPS on July 28. Crude oil futures are recently up 0.82% to $68.61. VLO August call option implied volatility is at 38, puts are at 43; below its 26-week average of 61, according to Track Data, suggesting decreasing price movement.

MGM Mirage (NYSE: MGM) closed at $7.73. MGM is expected to report Q2 EPS on August 3. August option implied volatility is at 83; September is at 87; below its 26-week average of 110, according to Track Data, suggesting decreasing price movement.

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

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Aetna Inc. (NYSE: AET) lowered its 2009 earnings guidance, initially sending the share price lower.
• Ciena Corp. (NASDAQ: CIEN) reported a bigger-than-expected Q2 net loss as revenues sank.
• Collective Brands Inc. (NYSE: PSS) saw Q1 earnings and sales decline, but beat Wall Street estimates.
• Google Inc. (NASDAQ: GOOG) earnings prospects led Goldman Sachs analysts to increase its forecasts.
• Guess? Inc. (NYSE: GES) weak Q1 results topped estimates and it offered guidance that pleased investors.

Today was looking like a fairly quiet day with no solid direction, but the green shoots crowd got some actual good news on the jobs front. This was the first report since once in January where the massive army of continuing jobless claims actually fell. We also saw a positive report showing positive CEO Sentiment again for the month of May. Here were today's unofficial closing bell levels:

Dow 8,750.24 +74.96 (0.86%)
S&P 500 942.46 +10.70 (1.15%)
Nasdaq 1,850.02 +24.10 (1.32%)

Top Analyst Upgrades
Top Analyst Downgrades

Today was one of those days where stocks looked lower early in the morning, traded lower, and stayed there. Despite recovering from triple-digit losses in the DJIA earlier on, we still closed down 65.63 at 8.675.24 on the DJIA.

The S&P took a bigger hit by almost 13.00 at a lower level of 931.76. Bond prices rallied and we saw a 9 basis point drop in the 10-Year Treasury to 3.55%.

Here were today's top analyst upgrades, and there were several key downgrades as well.

Valero Energy (NYSE: VLO - option chain) stock is down big today after the company warned it expects to report a second-quarter loss of 50 cents per share. Analysts had forecast a profit of 74 cents per share. The company also said it plans to sell about 40 million shares of common stock to fund general corporate purposes and recent acquisitions. 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 VLO.

This morning, VLO opened at $19.64. So far today the stock has hit a low of $18.50 and a high of $19.79. As of 11:25, VLO is trading at $18.75, down $3.63 (-16.2%). The chart for VLO looked bullish before today while S&P gives VLO a positive 4 STARS (out of 5) buy ranking.

Analyst upgrades:

• FBR Capital upgraded KBW, Inc (NYSE: KBW) to Market Perform from Underperform as it sees increased capital-raising opportunities for small and mid-sized banks and believes the company's quarter is off to a strong start. The firm raised its target price to $23 from $18.
• Pali Capital upgraded Morgan Stanley (NYSE: MS) to Buy from Neutral on expectations the company's strategic shift towards advisory, distribution and retail will be monetized sooner than expected and its capital markets business is gaining traction. The firm set a $33 target on the stock.
• Baird upgraded Stericycle (NASDAQ: SRCL) to Outperform from Neutral and raised its target to $58 from $55 based on valuation predictable earnings, and its market leading platform.
• Apollo Investment (NYSE: AINV) was raised to Outperform from Market Perform at Keefe Bruyette.
• HSBC Holdings (NYSE: HBC) was lifted at Goldman to Buy from Neutral.
• Dow Chemical (NYSE: DOW) was upgraded to Outperform from Neutral at Credit Suisse.

Valero Energy (NYSE: VLO) closed at $20.50. VLO is scheduled to report Q1 EPS on April 28. Crude oil futures are recently up 1.51% to $49.59. VLO May option implied volatility of 63 is below its 26-week average of 73 according to Track Data, suggesting decreasing price movement.

Schlumberger (NYSE: SLB) closed at $46.23. SLB is scheduled to report Q1 EPS on April 24. May option implied volatility of 61 is below its 26-week average of 65, according to Track Data, suggesting decreasing price movement.

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

Readers of this space know that one of the preferred sectors has been the refining sector, with exclusions made for a few companies. Would that the United States (and much of the world, for that matter), transition to a next-generation propulsion system (natural gas, electric, fuel cell) quickly, but unfortunately that goal still looks a decade away, perhaps more. And that means refiners like Valero Energy (NYSE: VLO) will remain a force.

The market punished Valero in 2008 after refining margins narrowed substantially, but folks, we're talking gasoline in the United States here: gasoline refining margins can't (and didn't) contract for very long, and significant, additional margin improvement in seen in 2009.