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Two companies we have held on and off over the years (F5 more than Netflix) were announced as new additions to the S&P 500 last night: F5 Networks (NASDAQ:FFIV) and Netflix (NASDAQ:NFLX). Congrats to those management teams as this is the most widely followed index on earth. (Youku can't be far behind.)

These two companies have been superstars in 2010. The problem is they are so extended and rich in value with investors bases full of "momo" types any misstep in 2011 is going to cause serious havoc. Next year is not going to be quite so easy for these names ... or the 20-25 similar type of companies every growth manager in America is crowded into.

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Four companies will join the benchmark S&P 500 index after the closing bell on Dec.17, S&P said in a statement on Thursday. Netflix, F5 Networks and Newfield Exploration Co (NYSE:NFX) will replace Office Depot Inc. (NASDAQ:ODP), The New York Times Co. (NYSE:NYT) and Eastman Kodak (EK) on the S&P 500. Cablevision Systems Corp (NYSE:CVC) will replace King Pharmaceuticals (KG) since King Pharma's takeover by Pfizer (NYSE:PFE) is expected to be completed soon, S&P said.

On a side note, I've often noted the change in nature of the market the past few years. I think a lot of this is the algo trading and EFT dominance. A body in motion continues to go in motion far longer now (without a break) than 5, 10, 15 years ago. While the gains have been modest the NASDAQ index has been up each and every day of December. Santa Claus certainly loves his tech stocks. The +0.3% to +0.4% pattern in almost every premarket is also back. Remember when you are up 0.35% premarket via the "urgent buyer who just can't wait until 9:30 a.m.?" The market actually has to fall in excess of 0.35% during regular hours just to go negative. It remains an unshortable market with massive complacency as everyone believes the Fed now backstops everything on earth. Free market capitalism rules.

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There is an obvious yawning gap in the NASDAQ chart created on the now systematic "first day of the month rally." I assume at some point the market will be allowed to go down again and fill this gap. But the first three letters of assume are ...

Disclosure: No positions

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Source: Superstars F5, Netflix Join S&P 500 - Can They Deliver in 2011?