Global markets present a warning for the US: Trader

International dips a bad sign for the US?

Market corrections in Europe and Asia have traders worrying the U.S. could be next.

The Bombay Sensex and the German DAX are now 11 percent below their respective late-January and mid-April highs. Meanwhile the is down 2 percent from its record highs set last month.

That has some investment managers warning traders to tread with caution.

"It's definitely flashing yellow all across the world," said Boris Schlossberg, managing director at BK Asset Management. "At the very minimum, investors should take some protection, maybe in terms of buying puts."

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The world's economy has been on the minds of many traders. Last week, the Organization for Economic Cooperation and Development to 3.1 percent from its earlier projection of around 3.7 percent. "The first quarter of 2015 saw the weakest global growth since the [financial] crisis," said OECD chief economist Catherine Mann.

A long-standing debate among U.S. investors is the extent to which slowing global growth will be a concern for American stocks.

But not everyone is particularly worried about the recent downturn in overseas markets.

"With the Sensex, there's very little correlation with U.S. indices," said Erin Gibbs, chief equity investment officer at S&P Investment Advisory Services. "Overall, we've seen a huge rise in global indices [outside the U.S.] since the beginning of the year. And now they're starting to come down—we've just seen a lot more volatility—whereas in the U.S. we've seen a little more stability."

Though Gibbs sees just 2 percent in U.S. earnings growth over the next year, she expects 12 percent growth in 2016. However, Schlossberg is skeptical of that growth will be so strong.

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"The Fed has stopped pumping credit," he said. "Just as the power of quantitative easing was underestimated, I am afraid the lack of QE may be underestimated as well. And despite relatively robust labor numbers, consumer demand has been a huge disappointment as the consumer continues to deleverage rather than spend."

"I think some puts or put spreads with six-month duration are warranted here," he added. "Buy straw hats in the winter while the volatility is low."

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