Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of electrical weapon maker TASER International (NASDAQ:TASR) are stunning the street today, rising as much as 8.9% following news that it will join the S&P SmallCap 600.

So what: TASER is replacing Consolidated Graphics, which recently was acquired by R.R. Donnelley & Sons and is therefore no longer traded publicly as a separate company. Often when a company joins an S&P index, shares of the stock will get a one-day pop on speculation that S&P ETFs and other institutional or mutual funds will be forced to, or elect to, purchase shares. Also investors tend to speculate that the inclusion in an index such as the S&P SmallCap 600 will lead to more exposure and more institutions and funds having the ability to purchase shares down the road. The logic here is the larger the potential investor base the more buying will result and the higher the valuation.

Now what: The reality is that such a move changes absolutely nothing for the fundamentals of TASER. As often as you see a one-day pop on news like this you also tend to see the pop correct itself in the days and weeks ahead. I believe TASER is a good company with a great future, but the valuation is a bit rich, trading now with a 2014 P/E ratio of over 50 based on analyst estimates of $0.33. Tesla tends to beat those estimates, and is growing, so the stock may prove to be undervalued over the long term; however, for Fools interested in investing a speculative position in TASER, they should still see if the shares settle or retreat back first. Even those institutions and mutual funds that are now able to purchase shares for the first time are aware that the jump in price isn't due to any change in the fundamental and, they too, may be waiting for a pullback before possibly entering. Give it at least a few days to avoid being tazed.

How to help make your portfolio perform stunningly
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

Nickey Friedman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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. The Motley Fool has a disclosure policy.

Compare Brokers