What to make of the recent commodity weakness? Much of it is due to the strength in the dollar and the weakness in the euro and the yen. If the greenback stabilizes, that would be a big help.
However, there are also macro events impacting commodities, like China. The country is going from a decade of massive infrastructure investment—which fueled the global commodity boom—to encouraging consumer consumption as a path to growth. Given that backdrop, it would be natural to expect declining commodity prices.
And look at crude prices. Yesterday, much was made of the the downward revision in the International Energy Agency's (IEA) demand forecast. The IEA called the slowdown in demand "nothing short of remarkable." Demand is expected to grow by only 0.9 million barrels a day in 2014, which is pretty paltry for a global market of roughly 93 million barrels a day.
But much of the demand decline is due to more energy efficient devices, particularly cars. That is not a sign of weakness, it's a sign that technologies are getting more efficient. On the supply side, the U.S. is adding capacity. That is a huge help for the oil industry, and for the country's energy security. Overall, cheaper crude should be good for the stock market.
However, where does that leave oil stocks? Are they expensive if West Texas Intermediate goes from $91 to a range somewhere in the low $80's?
Some of the shale plays become less attractive when oil goes into that range. However, you can already predict investors will step in and buy into the decline. Many shale names are down 5 to 10 percent this month, making them a bargain.
I expect that to stabilize. After all, how many companies can provide you with 20 or 30 percent growth a year in terms of production? Not many. Even if prices are down 30 percent, earnings growth would be substantial.
--By CNBC's Bob Pisani