Despite largely positive corporate earnings reports, investor caution has set upon Wall Street. For the third straight day stocks are set to move into negative territory, with futures showing the three major U.S. indexes heading lower ahead of Thursday's opening bell.

Some blamed Wednesday's near 1% drops in the Dow Jones industrial average and the S&P 500 on a late-day sell-off driven by the latest Beige Book survey from the Federal Reserve that showed the economy is ever so slowly emerging from recession -- too slowly, it would seem, for investors.

Stocks are poised to head lower as investors continue to digest news out Tuesday about the nation's flagging housing market. While in recent months optimism had crept into builder stocks in anticipation of recovery, a report from the Commerce Department showed new-home construction flat last month.

The news sent the three major U.S. stock indexes lower in trading yesterday, and futures this morning show the Nasdaq Composite Index and the S&P 500 each lower by a half percent, along with the Dow Jones industrial average, which could be trading back under the 10,000 level.

The most recent data released from the Federal Reserve's Open Market Committee meetings show that the Fed remains relatively positive, albeit cautious, about an economic recovery in the U.S. This means that the Fed can start planning to wind down some of its debt buying programs including the its current program to purchase $300 billion in Treasury debt.

While the data was just released on Wednesday, the meetings actually took place on August 11th and 12th. But the results still merit scrutiny, especially for investors who may wonder what this could mean for their portfolios. Let's take a look.

For the first time since early January, the DOW broke through the psychological 9,000 mark in today's trading.

It has been a strong day for the market, with the DOW currently sitting at 9,080, a little off its daily high of 9,090.50.

Bernie Madoff, the mastermind behind the world's largest ever Ponzi scheme, arrived at a federal prison in North Carolina to begin serving his 150 year prison sentence.

It will be hard to find anyone sympathetic to the 71 year old investor who will be spending the rest of his life behind bars. We still do not know if Madoff will serve out all of his time at the federal prison in Butner, North Carolina, but for now that is where he can call home.

Bernie Madoff was in federal court today, where he was given a 150 year sentence for charges related to his Ponzi scheme.

Reports from the courtroom state that Madoff, the mastermind behind the largest ever Ponzi scheme, showed little to no emotion today when he learned that he would be spending the rest of his life in a jail cell. Due to federal sentencing guidelines, Madoff must serve at least 80% of his sentence, so he will not be eligible for parole until 2129.

It was announced today that soft drink giant Coca Cola (NYSE: KO) had settled an almost 8-year-old lawsuit today for $137.5 million. The case originated back in October of 2000, and alleged that the company had artificially boosted its strike price in 1999.

According to the lawsuit, back in late 1999 Coca Cola applied pressure to some of its bottlers to buy unnecessary beverage concentrate. By adding "hundreds of millions of dollars" to the books, the company was allegedly able to report much higher sales volumes to its shareholders and keep its stock price artificially inflated. This practice is typically referred to as "channel surfing".

Despite the fact that the company decided to settle, there was definitely no admission to any wrongdoing. A company representative stated that the decision to go ahead and settle out was merely a move meant to avoid any length and drawn out legal battle, and by no means should be viewed as any admission of guilt in the charges.

Financial eras, like social periods, are often defined by moments or epiphanies when decision makers and/or citizens realized that a serious flaw/mistake/problem was occurring through time, and across space, and needed to be corrected.

The ever-incisive FT columnist and economist Martin Wolf describes one contemporary concern that's likely to be addressed: the failure to align the interests of managers with those of investors.

My BloggingStocks colleagues Peter Cohan and Zac Bissonnette have also written on the subject on several occasions in this space, and now the FT's Wolf has assembled additional data that may very well lead to public policy changes, both in Wolf's United Kingdom and in the United States.

When Yahoo (NASDAQ: YHOO) co-founder Jerry Yang returned to the CEO role this past summer, he gave investors and watching employees a "100-day review" speech that basically gave Yang time to study, assess and form solutions on getting the internet behemoth back on track for higher growth levels and ensuring it wasn't losing ad revenue to the competition.

Well, that 100 days is now nearly over with, and even the few acquisitions (BlueLithium and Zimbra) that Yahoo! has made recently have not quenched the irrational desire of analysts who aren't satisfied until immediate results happen. This is, of course, so unrealistic it's laughable. Any analyst should know drastic changes take time to work, aside from massive layoffs that can immediately affect a company's finances. This is not the case with Yahoo!, which is trying desperately to keep up with competitor Google (NASDAQ: GOOG) in the space for online advertising.

Although Yang has professed that nothing within the company is a "sacred cow," industry watchers may be already impatient in waiting for the company to somehow reinvent its business to capture more growth that Google appears to be hauling in by the truckload at the moment. Nothing so far looks like the "radical surgery" that many pundits probably thought would happen, and with Google set to deliver Q3 results this Thursday, the pressure cooker may become even more intense soon.

According to Marketwatch, investors fled global equity mutual funds to the tune of $2.39 billion last week, compared to a net in-flow of more than $2.7 billion in the week prior. What does this mean? If we use the lemming-like retail investors as a contrarian indicator, this is a screaming buy signal.

But there's a problem for mutual funds: If these retail investors are prone to buy at the tops and sell at the bottoms, their redemptions force mutual funds to buy and sell at precisely the wrong times. In January, I wrote about how this trend can effect mutual fund performance. I referred to a recent study that has shown that "liquidity-motivated trades" underperform trades made based on fundamentals. Mark Hulbert has suggested that investors consider using ETFs which, because they are closed-end funds, are not as vulnerable to shareholder redemptions.

I believe that investors should take a long look at exchange-traded funds for this, among other reasons. ETFs are often lower cost, easier to trade, and ideal for making macroeconomic bets. To learn more about ETFs, visit etfconnect.com.

Note: The Daily Option Update is provided by Stock Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX up .02 to 10.25.

Compass Bancshares-(NASDAQ:CBSS) option volume heavy & implied volatility up to 24 from 15. CBSS is recently up $3.91 to $65.67. Compass Bancshares, a financial services firm based in Birmingham, Alabama, is up on unconfirmed chatter SunTrust-(NYSE:STI) is interested in a M&A transaction with CBSS. CBSS call option volume of 3,887 contracts compares to put volume of 999 contracts. CBSS daily average volume over the last ten business days is 424 contracts. CBSS March option implied volatility of 24 is above its 26-week average of 16 according to Track Data, suggesting larger price risks.

Option volume leaders today were: Bank of America (NYSE:BAC), Microsoft Corp. (NASDAQ:MSFT), Boston Scientific (NYSE:BSX), Alcoa (NYSE:AA), Qualcomm (NASDAQ:QCOM) and Bidu (NASDAQ: BIDU).

Volatility Index S&P 500 Options-VIX up 1.19 to 11.16.

Microsoft Corp's. (NASDAQ: MSFT) February option implied volatility collapsed to 19 after record Q2 revenue of $12.54 billion. Microsoft reported Q2 EPS of 26 cents versus consensus estimates of 23 cents. Q2 revenue rose 6%. Microsoft launches Vista, Office 2007 and exchange Server 2007 on 1/30. Goldman Sachs says "good second quarter and stronger growth ahead." Microsoft February option implied volatility of 17 is below its 26-week average of 22 according to Track Data, suggesting decreasing price risk.

General Motors' (NYSE: GM) implied volatility was low at 34 going into the financial delay on its restatement. General Motors will delay its Q4 and full year earnings report, which was expected to be released next week, to again restate financial results. Citigroup has a $24 price target on General Motors. General Motors' overall option implied volatility of 34 is below its 26-week average of 42, according to Track Data, suggesting decreasing price fluctuations.

Option volume leaders today were: Amgen (NASDAQ: AMGN), Apple Computer (NASDAQ: AAPL), Nokia (NYSE: NOK), Microsoft and eBay (NASDAQ: EBAY).

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options were up today .37 to 10.79.

Tyco's (NYSE: TYC) option implied volatility was flat as investors digested the Tyco SEC spin-off filings. Tyco is expected to break itself up into three publicly traded company's at the end of April of 2007 (Electronics $12.7 billion in revenue, Healthcare $10 billion in revenue & Fire & Security Engineered products $18 billion in revenue). Prudential said "Investors buying Tyco shares based on sum-of-the-parts valuation may want to reconsider given that prevails expected highest multiple businesses likely to incur highest tax rates (30%+) in year 1 & 2." Tyco's overall option implied volatility of 21 is near its 26-week average, according to Track Data, suggesting non-directional price risks.

Option volume leaders today were: Yahoo (NASDAQ: YHOO), Apple Computer (NASDAQ: AAPL), Texas Instruments (NYSE: TXN), Amgen (NASDAQ: AMGN), and Google (NASDAQ: GOOG).

Note: The Daily Option Update is provided by Options Specialist Paul Foster of Theflyonthewall.com.

Poor General Electric. Without its charismatic leader Jack Welch at the helm, it’s like the big friendly nice guy of the investing party -- it tries so hard, but gets so little attention.

On April 13 GE posted first quarter results that included double-digit increases in earnings, revenues and cash flow. Its current steady Eddie Chief Executive, Jeff Immelt, boasted on the conference call that new orders were up 33% and cash from operating activities had more than doubled to $6.7 billion. Those are heady achievements for a company with revenues of $38 billion last quarter alone.

But did the stock price move? Not really. It fell a bit for two days after reporting earnings and climbed the next -- like just about everything else on April 18 -- leaving it now at around $34. That’s squarely in the middle of its ho-hum 52-week trading range of $32 to $37.