Psychology behind whipsaws, 20MA & current US market momentum

Good morning everyone. Just a quick post before I head to work. I had some questions on whipsaws as well as how my lovely 20MA actually works as a resistance in a bear market.

I don’t know if I said it here but I anticipated the S&P to be supported at 900. I think I posted in another forum  but anyway, what happened was it pierced through that last night and then closed at around 903 or so? I think 906 is the fibonacci retracement from the lows to the recent highs at 61.8% so it did close a little lower but what really happened at 900 was, people who went long on an intraday rebound when the first test of 900 came into fruition. It rebounded a lil and then sold off and traders would generally put their last stops right at that last bottom. The market makers know that. And they would try intentionally to pierce through. That is  your whipsaw. So the retail traders would be selling, the market makers will begin buying back, and when it rebounded again, guess who came back in to buy at a higher price? So basically that seems to be the psychology behind whipsaws. Personally I cater a certain % for a whipsaw. If it does break below that that I would want to cut the position as weakness is confirmed in a very bearish scenario. In a not too bearish scenario, a break below could come fast and furious and then a rebound could happen to re-test the new support turn resistance. This will be the ideal place to go short. Many times before I was sucked into chasing a downward flush. Only to see the price rebound back to that critical line. Could have gotten a better price to short right. That is intraday. On a daily chart, that support has NOT cracked until it closes below. So yes it could rally all the way back up to close above the support, with a mere pierce through the support. Obvious whipsaws, and the bulls would have been squeezed, and so would the bears. In chinese I call this ‘Tong Sha!’, which means KILL ALL! Hey, it is a brutal world out there. U kill everyone in your path cuz your job is to make money as an institutional trader.

I gotta go to work now. I will come back later when I have time to talk about how the 20MA works as a ceiling, as well as how the US stock market is performing VS the USD and oil.

Later!