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

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Art Cashin on the state of the market rally

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 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."

VIDEO4:5404:54
The full interview with Art Cashin
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