One of the hardest decisions a trader makes is to take a punt against the current trend. It is seldom profitable immediately, and he worries how far away the market will go before his view becomes the accepted thinking. The short term trend continues to be positive and the futures are indicating a higher opening. Can we still look for a move to 767, and how high can the S&P index go before the bulls give up?

If you go back to this chart of the S&P500, you will observe that Elliott Wave Principle allows for the second retracement following an extended fifth wave to actually go above the fifth wave high, posting an irregular top. In the current situation, I will not panic even if we get a move to 935 before we move aggressively down. I would actually like such a move because the sell-off (if it happens!) will be even more severe, and the downmove will be much faster.

A successful trader should also be a good money manager. So be careful about how much you risk against the current trend. It is always better for you to sell aggressively when the move begins in earnest. You may not catch the absolute top, but you will be a lot more comfortable with the position. Besides, you also know where to place your stops – it should be above the high posted.

Related S&P500 links:

Was that the stock market bottom?
SNP500 revisited
S&P500 and Citi
Fifth wave extensions can make you rich!
What is a significant rally in the stock markets?
Harmony in markets: S&P500
S&P 500: Potential Ending Diagonal Triangle
Ending Diagonal Triangle in S&P500?
S&P500 Elliott Wave update
S&P500 index: is a top already in?
S&P 500 update: where is the top?
S&P500 continues its rally
S&P500 remains resilient
S&P500 ready to dive?
S&P500 Elliott Wave update:21 May 2009
S&P 500 breaks higher: update 2 June 2009