Bulls must maintain a key level of the S&P 500 if they hope for another surge, and investors should look at intraday market dynamics to gauge the momentum of the market, said Art Cashin, director of floor operations at UBS Financial Services.
Overall, Cashin said that market bulls need to come back, en masse.
"The bulls need to seize control again," he said on "Squawk on the Street" Thursday. "They're losing on the inside game. Advances and declines, things like that. They've got to really get it together."
Part of this "inside game" is represented by weakness in the financial sector, Cashin said. "Some of the areas that have shown key weakness have been just the ones you don't want to see weakened if you're going to get a bull surge again."
The S&P has held above 1,680 during the most recent pullback, and Cashin called this level "a really important area" to watch. "If they can continue to [stay above that level], they might be able to rebuild and get full control."
He said it was "quite possible" that the S&P could regain highs of over 1,710 if the bulls begin to reassert themselves. Cashin credited the early upward moves in the market on better data from China and Germany, while upward momentum in Europe spills over to U.S. markets.
The key thing for investors to watch is whether strength early in the trading day carries through to the end of the session, he said.
"What happens late in the session is often more important than what happens early," Cashin said. "Early, you've got time to bluff. You can faint or do whatever, but when the clock is running out, you've got to do what you've got to do."
Because the yield on the 10-year Treasury is declining, he said, market moves are "less about tapering talk and more about market internals."
The end of the Muslim holy month of Ramadan and uncertainty surrounding the cancellation of the September Obama-Putin meeting have created a backdrop of anxiety for the markets, Cashin added.