As stocks continue to soar, with the S&P 500 ($INX) at 1,148 at one point during the day and the Dow Jones Industrial Average up around 200 points just today, investors who think the upward trend will continue may want to consider this: There is very little volume behind the market's move.

My colleague Dan Burrows points out in a story published on DailyFinance, that without volume, market action tells you not want people are doing, but what computer trading is doing.

The Nasdaq Stock Market announced Thursday that trading volume on ETFs reached a new record in September with an average daily trading volume of 785 million shares. That was part of a new record trading volume of 3.3 billion shares.

IndexUniverse says that ETFs now make up more than one-third of the U.S. market trading volume. They cite data from the National Stock Exchange , which says ETFs represented "a record 35% of all U.S. equity trading volume." That's up from 31% in August. Think about that: more than one-third of stock trades in America are for exchange traded funds.

Trim Tabs just came out with a report showing investors have been pulling money out of stock funds -- but throwing them into ETFs. Trim Tabs estimates investors took well over $40 billion out of all mutual funds in September, but meanwhile put about the same amount into ETFs. For the last 12 months, we've pulled $117 billion out of mutual funds and put $127 billion into ETFs.

For individual investors, the move makes sense. When the market is moving around like it has been, it's scary to be in a vehicle where you can only trade at the end of the day? But I can't imagine that all of that ETF volume isn't helping whip around the prices of the underlying shares.

Countrywide Financial (NYSE: CFC) volatility decreases as share price stabilizes. CFC, the largest U.S. home mortgage lender, is recently up $1.30 to $28.04. CFC call option volume of 10,877 contracts compares to put volume of 17,814 contracts. CFC August straddle is priced at $4.20. CFC September option implied volatility of 98 is above its 26-week average of 47 according to Track Data, suggesting larger price risks.

General Electric (NYSE: GE) volatility of 25 above 26-week average of 19. GE closed at $39.10. GE over all option implied volatility of 25 is above its 26-week average of 19 according to Track Data, suggesting larger risk.

Bear Stearns (NYSE: BSC) over all volatility of 61 above 26-week average of 33. BSC closed at $113.81. BSC over all option implied volatility of 61 is above its 26-week average of 33 according to Track Data, suggesting larger price movement.

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

Volatility Index S&P 500 Options-VIX up 0.24 to 13.53

Advanced Micro Devices Inc. (NYSE:AMD) calls (quoted in Pennies) busy on chatter of private equity cash infusion. AMD is recently up $0.46 to $13.87. AMD has been frequently subject to LBO chatter; today chatter is circulating that a friendly private equity-strategic partner could surface to make cash infusion. Speculation is that AMD could announce a deal similar to the deal Sun Microsystems Inc. (NASDAQ:SUNW) announced on 1/23/07, when it received a $700 million dollar private placement from KKR. AMD call option volume of 73,560 contracts compares to put volume of 9,747 contracts. AMD April option implied volatility of 41 is below its 26-week average of 45 according to Track Data, suggesting decreasing price risks.

eBay Inc. (NASDAQ:EBAY) implied volatility is low. Meg Whitman enters ninth-year working as eBay CEO. EBAY is recently up $0.23 to $31.72. Meg Whitman has an estimated net worth of $1.2 billion according to Forbes, much of it in EBAY stock. Years ago, Whitman said she would leave EBAY after eight to ten years. Whitman joined EBAY in 1998. EBAY has a market cap of $43 billion. Microsoft Corp. (NASDAQ:MSFT) has a market cap of $270 billion. EBAY overall option implied volatility of 34 is below its 26-week average of 37 according to Track Data, indicating decreasing risks.

Option volume leaders today are: SanDisk Corp. (NASDAQ:SNDK), AtheroGenics Inc. (NASDAQ:AGIX), Halliburton Co. (NYSE:HAL) and Qualcomm Inc. (NASDAQ:QCOM).

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

Volatility Index S&P 500 Options-VIX down 0.57 to 14.02.

Morgan Stanley (NYSE:MS) April option implied volatility-Risk stays elevated into EPS.
MS operates its business through four segments: retail brokerage, asset management, institutional securities. Investors expect to hear more about MS plan to spin off its Discovery Card, a company with 50 million card members and four million merchant /cash access locations. MS is expected to report EPS of $1.88 on 3/21 according to Thomson First Call. MS April option implied volatility of 28 is above its 26-week average of 24 according to Track Data, suggesting larger price risk.

Motorola Inc. (NYSE:MOT) volatility and volume Spikes on canceled CEO speech, LBO and PALM chatter.
MOT is recently up $0.46 to $18.74 on LBO speculation. Carl Icahn entities own 1.39% of MOT. The Chicago Tribune reported MOT CEO Edward Zander canceled his keynote speech at the cell phone's industry annual U.S. trade show, CTIA Wireless. Chatter is also circulating that MOT could purchase Palm Inc. (NASDAQ:PALM). MOT call option volume of 35,471 contracts compares to put volume of 18,121 contracts. MOT April option implied volatility of 35 is above a level of 30 from 70-minutes ago. MOT average option implied volatility over the last 26-week average is 29 according to Track Data. Increasing option volume and implied volatility suggests larger price risk fluctuations.

Option volume leaders today were: AtheroGenics Inc. (NASDAQ:AGIX), Motorola Inc. (NYSE:MOT) and Accredited Home Lenders Holding Co. (NASDAQ:LEND).

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

Volatility Index S&P 500 Options-VIX down 1.38 to 15.41

Boeing Co. (NYSE: BA) -- implied volatility indicates low Risk. BA's first flight for the 787 Dreamliner (airplane #1) is "expected-targeted" in late August 2007. BA held a quarterly media briefing with commercial airplanes' CEO Scott Carson. BA is recently up $.32 to $90.31. BA's overall option implied volatility of 22 is near its 26-week average of 24, according to Track Data, suggesting decreasing price risk.

Oracle Corp. (NASDAQ: ORCL) -- April option implied volatility suggests Flat risk into EPS and Outlook. ORCL is expected to release EPS of $.23 after the close on March 20. Wachovia says "we anticipate in-line or better results, solid guidance for the rest of the year, and upbeat perspective on the market environment. Maintain Outperform." ORCL April option volatility of 28 is near its 26-week average according to Track Data, suggesting non-directional fluctuations.

Option volume leaders today were: AtheroGenics (NASDAQ: AGIX), Microsoft (NASDAQ: MSFT) and Qaulcomm (NASDAQ: QCOM).

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

As a result of the growth of exchange-traded funds (ETFs), volume in certain smaller stocks has spiked disproportionately. This is due to the fact that, when money flows in and out of ETFs, funds are forced to buy and sell the holdings proportionately. Consequently, more money flows in and out of ETFs than mutual funds because they are so easy to trade (bought and sold through any broker at any time during the day), so ETFs have had a much larger impact on small company stock prices and volumes than mutual funds have had historically. According to a Wall Street Journal (subscription required) piece on this issue, when the markets fell during late February, "Between Feb. 22 and Feb. 28, just one ETF, the iShares Russell 2000, reported outflows of $2 billion, whereas major small-stock mutual funds combined had outflows of only $101 million, according to AMG Data Services." (emphasis mine)

While this is seemingly insignificant beyond the obvious (price and volume increases in some index-held small-cap companies), when you consider the implications of a volume spike, the issue becomes more important. Many technicians (people who trade stocks based on their price and volume patterns) use volume as an indicator of "special knowledge." However, ETF buying is certainly not special knowledge, and it is actually the direct opposite -- "insensitive buying." As a result, one must certainly question the validity of volume spikes as a method of choosing stocks with smaller market capitalizations if they previously had any confidence in the methods of technical analysis.

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

Volatility Index S&P 500 Options-VIX at 18.46

Washington Mutual -- (NYSE:WM) implied volatility & put volume indicates Aggressive Risk. WM, a consumer and small business bank with assets of $346 billion, is recently down .87 to $41.71. According to SNL Financial for The Wall Street Journal, WM has loan loss reserves of 0.60%. This is below banks set aside average of 1.09% at the end of last year according to data from 518 publicly traded banks according to SNL. WMcall option volume of 8,889 contracts compares to put volume of 38,848 contracts. WM April option implied volatility of 28 is above its 26-week average of 18 according to Track Data, suggesting larger price fluctuations.

MGIC Investment Corp. -- (NYSE:MTG) volatility & put volume elevated suggests hedging of risk. MTG provides private mortgage insurance in the to the home mortgage lending industry.SBSH lowered its price target to $71 on "MTG's '06 10-K, filed yesterday, provided revised guidance regarding C-BASS -- indicating that the 1Q07 earnings contribution from unconsolidated subs will likely be 'materially lower' YOY." MTG call option volume of 2,291 contracts compares to put volume of 9,136 contracts. MTG April option implied volatility of 42 is above its 26-week average of 28 according to Track Data, suggesting larger price risks.

Option volume leaders today were: Apple (NASDAQ:AAPL), New Century (NYSE:NEW), Novastar (NYSE:NFI) & Pfizer (NYSE:PFE).

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

Volatility Index S&P 500 Options-VIX up .20 to 10.22.

XM Satellite Radio Holdings Inc. (NASDAQ:XMSR) -- option implied volatility decreases after SIRI merger of equals announced. XM Satellite Radio is recently up $1.70 to $15.67. SIRI and XMSR to combine in $13 billion merger of equals. XMSR shareholders will receive 4.6 SIRI shares for each XMSR share. RBC Capital Markets says "Incremental synergies for XMSR and SIRI should be approximately $7.96/share and $1.73/share. We estimate 50%-75% probability transaction will be completed." XMSR April option implied volatility of 49 has decreased below its 26-week average of 53 according to Track Data, suggesting decreasing price risks.

Sirius Satellite Radio Inc. (NASDAQ:SIRI) -- implied volatility suggested less risk in XMSR deal. Sirius Satellite Radio is recently up .27 to $3.97. SIRI is expected to report EPS on 2/27. Bear Stearns says "The deal would need to gain regulatory approvals to be consummated -- at this point, we have yet to form an opinion on whether the deal would receive these regulatory approvals." SIRI June option implied volatility of 39 is below a level of 47 from last week according to Track Data, suggesting decreasing price risks.

Option volume leaders today were: XM Satellite Radio Holdings Inc. (NASDAQ:XMSR), Sirius Satellite Radio Inc. (NASDAQ:SIRI) Apple, Inc. (NASDAQ: AAPL) and Microsoft Corp. (NASDAQ: MSFT).

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).

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

Volatility Index S&P 500 Options-VIX up .63 to 11.07.

New Century Financial Corp. (NYSE:NEW) implied volatility & put volume Aggressive on Subprime risk

New Century Financial is a real estate investment trust, providing mortgage products to borrowers nationwide, is recently down $1.95 to $17.29. New Century Financial sold off 35% yesterday after announcing it would restate operating results for the first three quarters of 2006. Roth Capital says, "we have no reasonable basis on which to calculate estimates of GAAP earnings, taxable income, dividends or fair value. We are, therefore, suspending our estimates, price target and rating."

New Century Financial call option volume of 16,187 contracts compares to put volume of 41,414 contracts. NEW March option implied volatility of 92 is above a level 69 from yesterday and its 26-week average of 43 according to Track Data, suggesting aggressive price fluctuations.

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

Volatility Index S&P 500 Options-VIX up .27 to 10.59.

New Century Financial Corp. NYSE: NEW implied volatility bid up as NEW sells off on restatement. New Century Fin'l, a real estate investment trust, providing mortgage products to borrowers nationwide, is recently down $8.72 to $21.45. New Century Fin'l announced it will have to restate operating results for the first three quarters of 2006. Merrill Lynch downgraded NEW to Sell, Jeffries lowered to Hold & Friedman Billings downgraded NEW to Underperform. NEW March option implied volatility of 69 is above its 26-week average of 42 according to Track Data, suggesting larger price risks.

H&R Block-NYSE:HRB April option implied volatility & put volume elevated on hedging. H&R Block is recently down $.30 to $24.54. Soleil said on 2/7/07 "we rate H&R Block Buy; $29 price target. We believe Block is close to entraining sale of the company (whole or in parts)." H&R Block call option volume of 2,945 contracts compares to put volume of 42,299 contracts. HRB April option implied volatility of 33 is above its 26-week average of 26 according to Track Data, suggesting larger price fluctuations.

Option volume leaders today were: Cisco-(NASDAQ-CSCO), Akamai (NASDAQ: AKAM), Bristol Meyers Squibb (NYSE: BMY) and Apple Computer (NASDAQ: AAPL).

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

Equity Office Properties Trust's (NYSE: EOP) volatility is at 15 into Blackstone raising bid to $54 cash. Equity Office Properties is recently trading at $54.66, suggesting a higher bid is expected from other groups. Equity Office Prop announced it has amended its merger agreement entered on 11/19/06 with Blackstone Group. Blackstone will acquire all of Equity Office Prop common stock for $54 a share in cash. A group led by Vornado Realty Trust (NYSE:VNO) had bid $52. Equity Office Properties' overall option implied volatility of 15 is near its 2-month average, according to Track Data.

Akamai Technologies' (NASDAQ: AKAM) February option implied volatility flat is at 50. Akamai will report EPS on 2/7/07. Akamai, a leading global service provider for accelerating content and business processes online, recently traded at $53.47. Deutsche Bank has a $59 price target on Akamai . Alex Brown said, "We expect Akamai to deliver a strong 4Q with potential upside to our estimates on strong internet retail sales during the holiday season." Akamai's February option implied volatility of 50 is near its 26-week average, according to Track Data, suggesting non-directional price fluctuations.

Option volume leaders today were: Google Inc. (NASDAQ: GOOG), Apple, Inc.(NASDAQ: AAPL), US Steel (NYSE: X), Microsoft Corp. (NASDAQ: MSFT) and eBay, Inc. (NASDAQ: EBAY).

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

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

Volatility Index S&P 500 Options-VIX down .32 to 10.02.

eBAY, Inc.-(NASDAQ:EBAY) option volume & implied volatility elevated at 52 into EPS

eBAY, an operator of a global online trading marketplace including an electronic payment platform PayPal, is expected to report EPS of .28 cents after the close. EBAY will implement fee changes-increase on 1/30/07. EBAY February option implied volatility of 52 is above its 26-week average of 40 according to Track Data, indicating larger risks.

Corning Inc. (NYSE:GLW) option volume heavy, implied volatility decreases as GLW rallies on EPS

Corning reported 4th quarter EPS of .31 cents verses consensus estimates of .28 cents. Corning is recently up $2.00 to $20.84. Buckingham has a $34 price target on Corning. Corning call option volume of 46,801 contracts compares to put volume of 16,919 contracts according to Track Data. Corning February option implied volatility of 31 is below a level of 44 prior to Corning releasing EPS. Decreasing option implied volatility suggests decreasing price fluctuations.

Option volume leaders today were: Yahoo! Inc. (NASDAQ: YHOO), Apple, Inc. (NASDAQ: AAPL), Advanced Micro Devices (NYSE: AMD), Qualcomm (NASDAQ: QCOM) and eBay (NASDAQ: EBAY).

This Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

Today the Volatility Index S&P 500 Options (VIX) was up .03 to 10.80.

SunPower Corporation (NASDAQ:SPWR) puts bid higher than calls on difficult to borrow into earnings per share and speech. SunPower designs, develops, manufacturers, and sells electric power products, systems, and services. SunPower will report EPS on 1/25. President Bush's State of Union Speech is expected to emphasize renewable and alternative fuels as a source to decrease reliance on foreign oil. SunPower February call option implied volatility was at 48, puts at 59 because SunPower is difficult to borrow. SunPower 26-week average option implied volatility was 50 according to Track Data.

Pacific Ethanol Inc. (NASDAQ:PEIX) implied volatility was flat as PEIX rallied into the State of Union Speech. Pacific Ethanol is engaged in the business of marketing ethanol. PEIX was up $1.45 to $18.30. Crude oil was up 1.86% to $53.55. President Bush's State of Union Speech is expected to emphasize renewable and alternative fuels as a source to decrease reliance on foreign oil. Freidman Billings says "we are raising our price target for Pacific Ethanol from $16 to $20 and moving from a Market Perform to an Outperform investment rating based on expectations for positive momentum in the stock resulting from an increasingly favorable regulatory environment." Pacific Ethanol February call option implied volatility was at 55, puts at 64 on Pacific Ethanol being difficult to borrow and expected downward Pacific Ethanol price pressure. Pacific Ethanol 26-week average option implied volatility was at 61 according to Track Data, suggesting non-directional price risks.

Citigroup Inc. (NYSE:C) is recently down .22 to $54.45. Goldman Sachs increased its 2007 EPS estimates to $4.60 from $4.56. Citicorp over all option implied volatility was flat at 15 according to Track Data.

Option volume leaders today were: Yahoo! Inc. (NASDAQ: YHOO), Apple, Inc (NASDAQ: AAPL), Pfizer Inc.(NYSE: PFE), Amgen (NASDAQ: AMGN), and eBay Inc. (NASDAQ: EBAY).