Let's look at the charts:

On the Daily data chart, note that the RSI(7) has fallen below the RSI(14), which has fallen below the RSI(21). That's ominous.

For the Hourly data chart, same story: The RSI(7) has fallen below the RSI(14), which has fallen below the RSI(21).

Thursday lunchtime (July 14) seems to have been the tipping point.

That's two omens.

Note also the declining MACD for both charts.

The Weekly data chart, however, still shows a rising "Mo". RSI(7) is higher than RSI(14), which is higher than RSI(21). I like to see it a little weaker before shorting.

But this is a stock that went up like a rocket, and as the saying goes, what goes around, comes around. It could come down as fast as it went up.

Faster actually. They usually do.

According to my reader: "Bear Stearns noted that according to comScore Networks, U.S. Internet search data for June showed that Google market share fell slightly as both Yahoo! and Microsoft unit MSN both made gains.

Bear Stearns expects Google to report second-quarter pro forma earnings of $1.31 per share on revenue of $860 million, compared with a consensus estimate for pro forma earnings of $1.19 per share on revenue of $840 million. "We will continue to look for signs of improving fundamentals for Google that will cause us to revisit our longer-term thinking on the company. At this time, however, we maintain our current estimates and our 'peer perform' rating on the stock," the firm said.

Previewing second-quarter earnings, Banc of America Securities reiterated "buy" and "neutral" ratings, respectively, for Yahoo! and Google "[W]e continue to favor Yahoo! over Google given Yahoo!'s exposure to both search and branded advertising, but acknowledge the success Google has had in leveraging its brand equity in garnering market share within search." The research firm is expecting earnings for both companies at the high end of or slightly ahead estimates, "but not the blowouts we've become accustomed to over the past several quarters, particularly for Google." Banc of America has a price target of $43 on Yahoo! and a price target of $230 on Google."

I haven't checked this info, but it seems reasonable.

As to my reader's query: "Are the rats leaving the ship? ; Is it time to catch the downdraft in this puppy or can the talking heads blow enough hot air at it to keep it buoyant?" I can say I understand the sentiment. This was an insider deal all the way up, and now the public (via shorts) may get to enjoy the game, all the way down.

At least that is the sentiment.

I'd have to say that I think the arrogance of this company " and the supreme confidence of its leading supporters like Cramer " could position it in the hearts and minds of the public much like Microsoft.

Anyway, here is my reply, verbatim, to my reader a half hour ago or so:

I have not changed my views on Google management since pre-IPO times. What these guys did -- which a traditional underwriter would NEVER have allowed -- was to seed cheap stock to influential friends all over Silicon Valley and New York City -- to people who were minimally involved in the start up of the company, but who would provide a stalking horse service.

When you incentivize (third-party) people to the extent they did, its like sowing seeds and later reaping the harvest. It was a pure play on greed. This has never been discussed publicly (to my knowledge), and I have only alluded to it so far (in my blog). I'll leave it up to some book researcher to flesh out.

Does Google deserve to be the most valuable media company in the world? I don't think so, but it is, so I just avoid the stock.

I expect the stock to fall from grace at some point, which will be when the next bear market starts. The people who hold the "cheap" stock are smart people, and they won't hold long in a down market.

Yahoo, on the other hand, has always impressed me; (they are) smart people who deliver a great service. I think they'll be around in 10 years. About Google, I'm not so confident. I think they'll be like AOL and sell before the obvious pratfall that's coming.

To say if it's too soon to short is like asking somebody how many drinks does it take to get drunk. We're all different. Some traders are outright gamblers; others are heavy speculators; and then there are the conservative types.

As for me, count me among the more conservative. I short without hesitation (by buying put options where I know my maximum loss limit), but I only do so after a stock reaches Point Of Cycle 7 in my Idealized Market Cycle Model (which you can find elsewhere on this website), or at this link.

I believe the market will reach Point Of Cycle #7 at about the price of $283.61, which is the current M10 (which is the 10-Week or 50-Day Moving average). This number is very approximate " I am not an Elliott Wave devotee!

Still I believe in the same basic principles of Elliott Wave Theory.

I believe that once the momentum ("Mo") reverses, and starts prices down, the selling effect feeds on itself as fear (of losses) builds among the remaining holders. Usually this phenomenon doesn't end until there is an emotional purge with the literal throwing away of the stock.

I'm not about to guess when that happens, or at what price level, or even if it is going to happen.

But, you'll find me at the dance.