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“You have put me in here a cub, but I will come out roaring like a lion, and I will make all hell howl!” – Carrie Nation

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It’s an eventful morning in markets, but futures are little changed on all the cross-currents with the S&P 500 indicated to open up less than 0.10% while the Nasdaq is indicated to open down less than 0.10%. While futures on the Nasdaq are little changed, it comes are the index’s largest component – Nvidia (NVDA) –  is down 5% while its third-largest component – Alphabet (GOOGL) – is up 4%.

Crude oil is down over 1% on reports of a truce in the Russia-Ukraine war while gold is up over 1%, and Bitcoin is down 2%. In Asia, major benchmarks were modestly higher, even as Softbank fell 10% as that stock corrects hard as investors question some of its massive and concentrated AI investments. In Europe, the tone is also muted with the STOXX 600 up 0.2%.

We also got some government economic data this morning, although it was from September, so it’s as stale as the bread you may be using for your Thanksgiving stuffing. Overall. the Retail Sales report for September was modestly weaker than expected while PPI was also slightly weaker.

It’s up again?
It’s up again!

When it comes to Alphabet (GOOGL), whether you identify with the phrasing above that uses the question mark or the exclamation point depends on whether you own it or not. We’ve seen a lot of unbelievable moves in mega-cap stocks in the last few years, but the recent surge in GOOGL ranks right up there with any of the others. Following news reports this morning that Meta Platforms (META) is considering the purchase of Google TPU chips for its data centers in 2027, the stock is up another 4% this morning which would take its one week gain to 16.7%. After trading as low as $140 back in April, the stock is up over 135%.

With the steep rally we have seen in GOOGL shares over the last few months, the stock is poised to trade 65% above its 200-DMA today.  In the company’s entire history as a public company, that would be the most extended the stock has ever traded relative to its 200-DMA.

Besides the 135% rally off the April lows, over the last six months, GOOGL shares have rallied nearly 90%. The table below lists the ten largest gainers in the S&P 500 over the last six months, and GOOGL currently ranks eighth. In another sign that Tech and Communication Services still rule this market, the only two stocks on the list not from these sectors were Albemarle (ALB) and Robinhood (HOOD).  What makes GOOGL stand out from the rest of the names is its market cap. At $3.8 trillion through yesterday’s close, GOOGL’s market cap is more than ten times larger than the next closest stock listed. It’s like an aircraft carrier sprinting with a fleet of skiffs.

Last night after the close, news hit the tape that Sandisk (SNDK) would be added to the S&P 500 effective Friday (11/28). With the stock up nearly 500% over the last six months, the list of current top performers over the last six months is eating its dust. Looking at the chart below, it’s hard to imagine why, from a market timing perspective, anyone would think that now is a good time to add the stock to an index.

The people who make the decisions to add and subtract stocks to the various indices aren’t market timers, though.  And while there are plenty of other stocks out there that would make worthy candidates, SNDK currently resides in the S&P 600 Small Cap Index. With a market cap of over $33 billion, though, it’s hardly a small cap, and it casts a large shadow over all the other stocks in the index in terms of size. After SNDK, the next largest stock in the S&P 600 is SPX Technologies (SPXC), but its market cap is less than a third of SNDK’s market cap. So, why not put it in the S&P 400 Mid Cap Index, you may ask.  That would have been an option, but even in that index, SNDK would have already been the largest company in the index based on market cap. Even in the S&P 500, SNDK will still be larger than 228 of the index’s 500 components. Sometimes stocks become so large that there’s just nowhere else to put them!