NEW YORK (The Street) -- The first warning that indicates risk of a stock market correction is when all five major averages are below their key weekly moving averages at Friday's close-- and the indices may be headed in that direction.
If stocks end below the following key weekly moving averages, the market could see further declines: 18,023 Dow Jones Industrial Average, 2,103.6 Standards & Poor's 500, 5,028 Nasdaq Composite, 8,608 Dow Transportation Average and 1.247.85 Russell 2000.
As of noon on Tuesday, the Russell 2000 had rebounded above its key weekly moving average.
The second correction warning occurs when all five averages have declining weekly momentum readings.
The reading for the Dow 30 is projected to decline to 61.68 this week down from 61.70 on June 5.
The reading for the S&P 500 is projected to decline to 72.71 this week down from 81.58 on June 5, falling below the overbought threshold of 80.00.
The reading for the Nasdaq is projected to decline to 78.97 this week down from 80.56 on June 5 also falling below the overbought threshold of 80.00.
The reading for Dow Transports is projected to decline to 17.08 this week down from 18.92 on June 5 falling further below the oversold threshold of 20.00.
The reading for the Russell 2000 is projected to rise to 61.59 this week, down from 60.94 on June 5, making small caps the key to preventing a technical correction.
There are warnings from the daily charts. The Dow 30 and S&P 500 are below their 50-day simple moving averages of 18,021 and 2,101.4, respectively. The Nasdaq and Russell 2000 are on the cusp of their 50-day simple moving averages of 5,012 and 1251.28, respectively.
The Dow Transports are trading below what technicians call a "death cross" where the 50-day of 8,630 is below the 200-day of 8,750.
Dow Transports ended Monday down 10.5% below their all-time intraday high of 9,310.33 set on Nov. 28, so this major average is already in correction territory.