Breaking through a resistance band of 1,885 points on the S&P 500 could cause a panic among the market's more pessimistic investors and send stocks on their way to new record highs, veteran trader Art Cashin told CNBC on Thursday.
"There are a lot of new baby bears, a lot of new shorts in the market," Cashin on "Squawk on the Street." And those baby bears would probably panic and set us on the road to a possible run to 1,900 and a retest of all the former highs. The game is very much still on the table."
Investors should watch the 1,885 resistance level in the S&P as a bellwether for stocks, and 10-year Treasury notes as a barometer of anxiety over the standoff between Ukraine and pro-Russia separatists, said Cashin, UBS' director of floor operations at NYSE.
Cashin said earnings from Wall Street's biggest names have come in reasonably well, with profit margins reaching record highs. But many strong quarters have been the result of financial engineering and cost-cutting measures, raising questions about sustainability going forward, he said.
—By CNBC's Jeff Morganteen.