Possible double top in the S&P

[VirginiaBob]

What are all your projections about this possibly being a double top in the S&P. The chart appears to be a double top except the trough was only about a 4% drop, where a true double top requires a 10-20% drop (which we haven't had in a really long time). Any thoughts?

[Bullitt]

A double top cannot be called a double top until it breaks support and continues downwards. Similar to a head and shoulders cannot be called a H&S until it breaks the neckline (support). Bears have been calling for double tops a few other times recently such as when we recovered after the China Syndrome selloff. Just because a stock price hits a prior high does not mean it will make a double top. Any selling that takes place when a stock hits a 52 week high is fear selling. Selling because of the fear that a double top is imminent. The best part is that those who sell at the 52 week high realize their folly when the stock breaks to higher ground and are forced to buy back at a higher price. Thus driving it higher.

We're seeing a trading channel right now more than anything. More often than not when a trading channel whipsaws support, then bounces up at resistance, it blasts thru the resistance and on to new highs. Whatever way we break out of this channel will dictate the direction of things for a while longer.

In other words, Resistance watch out.