It ain't over 'till the fat lady sings.
But for now CAUTION is again the better part of valor:
>> SnP500 Intraday: http://img10.imagefra.me/i5bm/aarc/141u_b2a_ubk5c.png
>> SnP500 Daily: http://img10.imagefra.me/i5bm/aarc/141u_94e_ubk5c.png
Usually, when the pullback is too shallow the 2nd wave would either go sideways consuming massive amount of time or go into a running correction of higher highs and higher lows for the second wave thus providing the needed rest period before going for the 3rd wave rally. Pay the Fine or Serve the Time is the general guideline.
However, UP HERE .... market participants can become a little bit irrationally exuberant and thus trend traders become very aggressive in buying even at minor supports such as the 20ema. But then with too little preparation for the 3rd wave; more commonly, the 3rd might not be able to achieve it's nominal target, much less even the minimum target - as noted in the chart.
SnP500 is sporting a potential Double Divergence Sell Signal on the Daily Chart. Thus, the better course of action is to take some profits either today or early Monday. Then use trailing stops to protect the remaining positions.
A retracement of more than 61.80% of the 3rd wave can result in a failure to complete the 1-2-3-4-5 rally. Thus, I usually use a trailing stop a little below 61.8% retrace of the 3rd when SnP500 has already rallied considerably whether it be in intraday or on the daily chart - or for that matter, the weekly chart.
I sold the YM trade last night at 15,980 not willing to wait for a high-probability narrow range trading session for today (which what actually happened) or worse an unexpected bad news causing a sudden sell-off truncating the v-th wave - that can easily cause a failure to reach the 16,058 Nominal Target. (Don't want to be penny wise pound foolish with unpredictable overnight news).
Will wait again for +/- 7 days of pullback or consolidation range to buy the 4th wave bottom.
Nov 27 Addendum:
As indicated on my Comments today, AAPL is on the roll thus very hard for the major indexes to take a +/- 7 days of pullback down. Instead SnP500 and Dow Jones are doing a tap dance while Compq and Russell2000 are barreling upwards:
>> SnP500 Intraday Now: http://g10.picoodle.com/ltd/img10/5/11/27/aarc/f_141u_4a8_ubk5c.png
How long can SnP500 and DJ resist joining the party is a matter of hours if they suddenly breaks above the their most recent intraday highs.
- Usual trading strategy is to buy on a breakout above today's high with today's low the hard stop loss.
I'm a pullback buy guy.
Majority of Expert Traders and Master Traders I've trained with, in the past, prefer not to make money rather than lose money trying to chase a rally.
Most of the time, the rally ended up going up and painfully away when market participants (specially Scalpers) tried to have a piece of the action for days on ends. Thus, I might as well try using some scalping techniques to chase this Part II sing song rally.