Amid anxiety that Great Britain's debt rating will be cut, fears grow that the U.S. could lose its AAA rating.
Art Cashin, director of floor operations at UBS, offered CNBC his stock market insights.
"It got very scary yesterday, with both the dollar and Treasury bonds selling off," Cashin said.
He referred to Mohamed El-Erian's CNBC interview, in which the Pimco CEO exhorted the U.S. government to address the danger of losing America's triple-A rating.
"The fear on the floor has to do with Mohamed's idea of a 'neighborhood.' This thing could start to feed on itself. You get to a certain critical mass of selling..."
For an example, Cashin held up the model of "Bear Stearns and Lehman days," when some analysts said the financials were "solid as a rock."
"But when the market starts to disbelieve something, the selling can turn violent."
About Thursday's positive intra-day moves, he explained:
"Late in the day, we held the lows from the previous Friday — 8221 on the Dow, 879 on the S&P. When they held, that prompted a little short covering."
As to today, Cashin said, "The day before a 3-day weekend tends to be biased towards the upside."
But he cautions against mistaking that bias for an upside guarantee going forward:
"Next week will be absolutely critical. We may start to test some lower levels."
CNBC's Companies in the News:
Bank of America
Disclosure information was not available for Cashin or his company.