I am not going to over-analyze this chart, because that would be stupid, and I try to live in the real world. Obviously, the broad indices are short-term oversold right now. If anyone tries to "reveal" this to you today, try to tune them out for life -- unless they're in high school.

This is what you need to know: start a traditional Fibonacci model with the wobble the blue chip index experienced last April (its most serious test of 2017), and you quickly see that a 50% re-tracement shows up just around 23,500. Crank up a Fibonacci Fan model with Election night 2016, and guess what? The index is still on trend. Poof. The 38.2% re-tracement off that trend line land you where, gang? Oh, right, around 23,500.

What does this mean? It means that there could still be some downside. It also means that we have already sawed a lot of wood. You do what you want. If you read this article, then you know that this battle is afoot, and I am already on the field.

(This is an excerpt from Stephen "Sarge" Guilfoyle's Morning Recon, which now appears exclusively on Real Money, our premium site for active traders. Click here for a free 14-day trial and receive Morning Recon every day, along with exclusive columns from Jim Cramer, James "RevShark" DePorre, technical analyst Bruce Kamich and more.)

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