Stock Watch: Online Trading Is 'Smoking'

Shares of many online brokers saw strong gains on Friday after Hambrecht & Quist released a report that said online trading volumes are reaching record levels. The report, entitled "Online Trading Volumes Are Smoking," notes that the success of technology stocks and new issues has contributed to "a high level of speculative fever" and an increase in online trading.

Hambrecht & Quist reiterated its buy ratings on E*Trade (Nasdaq: EGRP), Charles Schwab (NYSE: SCH) and TD Waterhouse (Nasdaq: TWE). E*Trade climbed nearly 19 percent on Friday, gaining 5-13/16 to 36-3/4, Charles Schwab rose 5-15/16 to 42-7/8, and TD Waterhouse gained 2 to 16-5/8.

The Hambrecht & Quist report came one week after CS First Boston initiated coverage of numerous online brokers. Among the companies CS First Boston likes are TD Waterhouse and National Discount Brokers (NYSE: NDB). Shares of National Discount Brokers climbed 4-5/8 to 35-3/8 on Friday.