Major Correction Coming?

Is a major correction coming? That was a question for Fast Money Traders Tuesday morning as markets climbed higher despite a barrage of negative U.S. economic data.

U.S. home prices fell to 2002 levels in March, according to the latest Case-Shiller housing data. Prices fell 3.6% in the 20 key U.S. cities tracked by the index from the prior year.

The Chicago PMI data released Tuesday was also weak. The index dropped to 56.6% in May from April’s 67.6%. The worse-than-expected reading indicated that manufacturing sector, though still expanding, was weakening significantly.

Neither data point boded well for the upcoming employment situation report, scheduled for Friday release.

The good news driving the market higher appeared to be optimism that Europe’s sovereign debt crisis would not end with a Greek exit from the euro or massive default. A Wall Street Journal report that Germany may not push Greece to restructure its debt, making a second bailout package more likely, was fueling optimism Tuesday morning over Europe’s economic recovery – driving the euro higher against the dollar and goosing stocks.

But Fast Money’s Stephen Weiss, of Short Hills Capital, wasn’t buying Greece as a reason to buy the market.

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“Maybe we’re slightly oversold in the near term, but we can get more oversold,” wrote Weiss in his morning note. “GDP estimates have declined and the next revision will be to company earnings unless the economy reaccelerates.”

Weiss recommends increasing hedges and buying only “high conviction” positions.

Nouriel Roubini – the economist also known as Dr. Doom for predicting the global financial crisis – supported Weiss’ view. In a conference in Budapest, Roubini reportedly told a crowd that the market was at a tipping point and would soon fall due to signs of a weakening global recovery.

“Until two weeks ago I’d say markets were shrugging off all these concerns, saying they don’t matter because they were believing the global economic recovery was on track,” Roubini said, according to a Bloomberg report. “But I think right now we’re on the tipping point of a market correction.”

Gina Sanchez, director of equity and asset allocation for Roubini's firm, plans to reveal how Roubini is positioning for the coming correction on Fast Money's halftime report at 12:30 PM ET.

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CNBC.com with wires.