Stocks not out of the woods, ‘caution I think is in the air,' Art Cashin says

It appears anxiety over the North Korea nuclear missile threat is getting flushed out of the stock market.

The market made a solid comeback on Monday, after the war fears that dragged down stocks last week subsided.

But Art Cashin, UBS' director of floor operations at the New York Stock Exchange, doesn't want investors to feel a false sense of security.

"You always got to be prepared to know when to get out if you need to. So far no rush, but caution, I think is in the air," Cashin said Monday on CNBC's "Trading Nation."

Just because a missile launch may not feel imminent doesn't mean one couldn't happen eventually.

"I would say 'postponed,'" he said. "We have only a handful of B-2 bombers on Guam. They haven't added anything to them. They have not changed personnel. They have not called back unessential personnel."

"So you get this big bounce back rally here," said Cashin, a fixture at the New York Stock Exchange since 1964.

The S&P 500 gained 1 percent on Monday, registering its best day since April. The Dow, Nasdaq and Russell 2000 had their best days since June.

Even if the threat from North Korea continues to diminish over the next several weeks, there's another looming risk that investors may not want to ignore.

"What would hurt the rally is if the Fed … or ECB looked determined to start pretty early at tapering back. We still run the risk of a potential taper tantrum," Cashin said. "I'm more on the side of slightly neutral. We've had a heck of a run."

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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