GOOG broke the $475 level. Now longer term support comes into play.

One reason I thought the $475 area would hold better was the fact that the 50 day MA was sitting at $472.50. However, trading & technical analysis is not a science even though at times it seems to work that way. So instead of the 50 day serving to hold GOOG up, it almost seemed to pull the shares down beneath the line. Once the $470 level gave way, the flood gates opened bids were driven down very quickly. Welcome to GOOG 101 on a bad day.

All this of course, was stirred up the the WSJ piece talking about GOOG facing EPS pressure from ... interest income. Yes that's correct, the WSJ article seems to place more importance on interest income off of GOOG's large cash balance to be more critical to hit EPS numbers(for next qtr.) than the growth of core search, record online shopping stats, full qtr. of MySpace partnership, the GMail usage explosion, the growth of the Google Homepage etc...

End of year trading can be tricky and fickle, as large Hedge/Mutual fund dynamics come into play. This creates greater dispersion of stock movements. However, the relative level of many key technical levels are still relevant, but you have to broaden the ranges.

In my prior post I pointed out that the $475 level could fail to hold and better support exists in the $445-455 area. Just one day later, that looks eerily correct.

At this point ($462), GOOG has given up all of it's gains since the day after their earnings pop. Given that the last qtr. was so strong, YouTube has been completed and we are the midst of record online shopping season, as well as the seasonally best qtr. of the year -- the selling seems to be getting somewhat overdone.

My plan is still to add in the $445-455 area should it occur, in the meantime I increased my GOOG exposure modestly by adding some long-side option exposure to the portfolio.

Long GOOG, short puts.