These 8 Stocks Are on the Move

The winds of change are blowing through the S&P 500 -- and traders are already taking advantage of the new climate.

The widely aped S&P 500 announced changes to its components yesterday. In order to reflect their growing market caps, F5 Networks (Nasdaq: FFIV  ) , Netflix (Nasdaq: NFLX  ) , and Newfield Exploration (NYSE: NFX  ) will move from S&P's MidCap 400 index to the S&P 500.

In turn, current S&P 500 members New York Times Co. (NYSE: NYT  ) , Office Depot (NYSE: ODP  ) , and Eastman Kodak (NYSE: EK  ) will fall back into the MidCap 400. In addition, Cablevision (NYSE: CVC  ) will take the place of King Pharmaceuticals.

King is being nixed because Pfizer is about to acquire it, but the other three are simply victims of their fade in popularity. Newspapers, office supplies, and photofinishing are industries that have come under fire in recent years, though Office Depot's slide is more company-specific.

Over the next few days you'll be seeing an interesting phenomenon take place. Cablevision, F5, Netflix, and Newfield won't be officially added to the index until the end of next week, but that's unlikely to stop the next few days of gains. Investors know that index funds managers will be buying to be in position by next Friday's close, so buying in ahead of the horde is an easy trade.

It doesn't always play out that way. If speculators outnumber the eventual fund investors, the gains being notched today by the four additions may come undone in the coming days.

The move is redemptive at an opportune time. After all, Cablevision continues to shed cable subscribers, a problem that isn't going to get any better after it shut out couch potatoes during the World Series in a contract dispute. Netflix took a hit earlier this week when its CFO announced that he was leaving the company.

Over the next few days, all will be forgiven. The four inductees can't coast, though. There's nothing stopping Standard & Poor's from turning to them the next time it needs to weed out laggards to make room for next year's hot additions.

Netflix is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz has never been added to an index fund. He does not own shares in any of the stocks in this story, except for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On December 10, 2010, at 1:35 PM, khaledmrd wrote:

    Kodak got thousand of patents in digital cameras, Inkjet, 3D, OLED, Touchscreen, Networks, Online services, Online communication , etc and after many companies for potential billions of Licenses fees and back Royalties in the next few years

    they also gaining momentum in Digital Printer for Home and small office & Commercial & Packaging in a big way in the last 12 months which means selling more Ink, paper, plates, Chemicals, etc

    Also they announced in 2011 their R&D center Shanghai China will be the biggest globally and they have their most attractive and selling Digital Gadgets in their History, Easyshare cameras and New Waterproof camcorders and wireless touch screen frames are few of more will come Jan 6 @ CES 2011

    also CEO announced during the CC a new biz models that are testing that will be unveiled during Feb.

    Kodak compliment the like of Dell, Lenovo, Acer, Asus to enable them to compete in a ig way with HP and Apple And canon , etc in Printers, Photography & Video cameras gadgets, Ink technology and Kodak Also got a great Software division for workflow, etc

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