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Roubini Strategist: Positioning Yourself for a Possible Correction

The stock market is at a "tipping point" of a correction as economic growth begins to slow, renown economist Nouriel Roubini recently told Bloomberg. A celebrated bear, Roubini is best known for predicting the financial crisis.

Gina Sanchez, director of asset allocation at Roubini Economics, told CNBC on Tuesday that the markets had got excited about high profit margins because workers were getting laid off. It seems as though the layoffs are now coming to an end, though, so she's seeing the profit margins get squeezed. Her fair value on the S&P 500 is the 1,350 level while most strategist are looking for 1,400 to 1,450. Being as the market is trading off of macroeconomic news, she thinks expectations are going to have to be adjusted and the market could slide to the 1,300 level.

So how do you position yourself?

Sanchez said her firm is neutral on equities and commodities. Her firm is going to see what happens with fiscal stimulus. The market would perceive any drag on stimulus as a disappointment because expectations are too high, causing the S&P to possibly fall to the 1,300 level, she said.

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Trader disclosure: On May 31, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Steve Cortes owns (SO), (EXC), (KFT) and (K). Steve Cortes is short Nikkei. Steve Cortes is short EEM vs. S&P long. Steve Cortes is short (CAT). Steve Cortes is short (DE). Steve Cotes is short (CX). Steve Cortes is short Australian Dollars. Joe Terranova owns (XOM), (KSS), (CVI), (OXY), (TM), (BJ), (DIS), (PFE), (V), (HPQ), (FLX), (JPM), (MCD), (PEP) and (VRTS). Joe Terranova is short (DELL). Jon Najarian owns (AAPL), is short (AAPL) calls. Jon Najarian owns (IMAX), is short (IMAX) calls. Jon Najarian owns (AMZN) is short (AMZN) calls. Jon Najarian owns (OVTI) is short (OVTI) calls. Jon Najarian owns (CIGX) is short (CIGX) calls.

Brian Kelly
Accounts Managed by Brian Kelly Capital own (SLV) calls
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Accounts Managed by Brian Kelly Capital are short yen

Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
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Virtus Investment Partners Owns More Than 1% Of DOMINO'S PIZZA UK & URL PLC
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