D.R.
First of all do not over react!! This is normal for little kids to do this. My daughter has done the same thing and does not do it anymore. When he sticks is finger there, just move his finger out of the way. He is starting to notice different things about his body. You and your husband probably did this too as little ones. I have 4 children ages 21-3 and they have all done something strange like this. Don't worry, there is nothing wrong with him!