Don't be alarmed about sell-off, market saw a 'buyers' boycott': Veteran trader Art Cashin

  • Investors shouldn't really be "alarmed" by the market sell-off, says UBS' Art Cashin.
  • "If you're going to see the Dow down 800, you would expect you'd see somewhat of a stampede. You haven't," he says.
  • Instead, he thinks buyers have been boycotting the market.

Investors shouldn't really be "alarmed" by the market sell-off, veteran trader Art Cashin told CNBC on Tuesday.

U.S. stocks closed down sharply on Tuesday, with the Dow Jones Industrial Average plunging nearly 800 points, as fears rose about an economic slowdown.

"To some degree it's a buyers' boycott," the UBS director of floor operations at the New York Stock Exchange said on "Closing Bell." In other words, volume wasn't large because buyers were sitting out of the market.

"If you're going to see the Dow down 800, you would expect you'd see somewhat of a stampede. You haven't," Cashin added.

Investors were concerned about a possible inversion of the yield curve, which is when short-term rates exceed long-term rates. A so-called yield curve inversion could signal an economic slowdown is ahead.

On Monday, there was a partial inversion when the yield on the 3-year Treasury note surpassed that of the 5-year.

On top of the bond market action, fears about the U.S.-China trade war weighed on investors. Plus, there are renewed fears about Brexit after U.K. Prime Minister Theresa May's government was found in contempt of Parliament on Tuesday.

But none of that led to investors selling "like a trap door is open" or a stampede where the volume is big, Cashin pointed out.

"This has no sign of capitulation at all," he said.

— CNBC's Fred Imbert and Reuters contributed to this report.

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