"Some of it [trader optimism] has to do, believe it or not, with the Indian election. That's one geopolitical worry that's not as hot as before," Cashin said.
But he said there are contradictory forces at work:
"There's a real tug of war here. It looks like we're headed for a correction, but the bulls don't want to give in. This is a hypochondriacal week: The market's going to take its own pulse, take its temperature and see how good it feels."
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What about climbing energy prices? Cashin attributed that not to economic fundamentals improving, but to "Chinese stimulus — maybe the only stimulus in the world that's working." He believes the same influence is driving up base metals concurrently with energy. Another non-fundamental factor driving oil prices today: reports that "two pipelines in Nigeria were blown up," according to Cashin.
He is monitoring the S&P 500 closely. "If we get a close this week below 870, then you could go down to the 820 region," Cashin warned.
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Disclosure information was not available for Art Cashin or his company.