The Dow opened Monday's trading session at a record high, the S&P 500 inched closer to its own all-time highs, and a rally in Nasdaq's momentum stocks continued from Friday, Cashin said. Before Friday, the Nasdaq saw big losses as investors rotated out of biotech and Web companies and small-cap stocks.
The Nasdaq Composite needs to break through the 4,150 level in order to convince Cashin that the reversal was "successful, and we're back to square one." That's about 20 points higher than current levels, and gaining that ground appears "tough," said Cashin, UBS' director of floor operations at NYSE.
The Nasdaq rose 60 points on Monday. The S&P needs to pass 1,895—only a few points above current levels—to make the case for a reversal, Cashin said.
"The market still has a chance," Cashin said on "Squawk on the Street." "Despite the numbers we're getting from GDP, people still believe. So we'll let them believe and prove their case."
—By CNBC's Jeff Morganteen.