It is one thing to do it with an army shattered to pieces, with enemy landing in its rear threatening to cut off the only supply line and quite another with an army still capable of giving fight. Besides, Rommel also believed he would be able to continue his advance eventually.
Seconded. If Rommel had asked to retreat after First Alamein, he would have been instructed not to, as most of his forces were still in place. Although it does open up an intriguing thought. If, by some miracle of good sense and realism (unlikely as that was) Rommel had been allowed to retreat to the Fuka position, what would that have done to Churchill's plan to replace the Auk with Alexander and Gott? Would the Auk have been forced to follow and fight with the dreaded Dorman-Smith advising him?