Why this market is oversold: Insana

One of my most trusted sources, back when I was a full-time reporter, was Stan Druckenmiller, the hedge fund legend who ran George Soros' Quantum Fund and his own fund, Duquesne Capital, simultaneously, for years.

Two observations that Stan shared with me about markets have stayed with me for years:

1.) Bailouts are bullish.

2.) There are only two causes for bear markets: rising interest rates and wars.

No bull: This market is making a comeback

Wall Street NYSE Bull
Adam Jeffery | CNBC

This leads me to believe that we are nearing an end to the sharp valuation correction we have seen in stocks, since the preconditions for a bear market, at least by Stan's reckoning, do not exist.

It is true that the Fed may, I repeat may, be nearer to the process of "normalizing" interest rates. But the bond market has priced out the likelihood of a September hike, though it is nearly certain one will arrive by December.

After that, many economists, and even the Fed itself, do not know if rates will continue higher, or whether one rate hike will suffice for many months to come.

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Also, the U.S. does not appear ready to enter another war, despite hot spots around the world that are too numerous to mention.

This correction goes back further than currently acknowledged. It began in May, when the average stock began to roll over, the advance/decline peaked, and market leaders began to stumble.

The major averages caught up, or down, to the majority of stocks in August, in a rapid decline that took them down almost 15 percent and slashed price/earnings ratios from about 18 to 15.

All the hallmarks of corrective activity were in place. There has been capitulation selling, and we are beginning to see positive divergences as the market retested its recent lows.

Read MoreNobody panic—this is just a re-test: Insana

While no one can predict whether the selloff is completely done, I believe we are much closer to the end of this down move than to the beginning.

The market is clearly oversold, high fliers are relative bargains, the number of new lows on the NYSE has contracted sharply from the depths of the selloff and overseas markets, especially Europe, appear to be stabilizing.

Read More China stocks are still scary at this level

I still like the U.S. better than the rest of the world, although Europe broadly, Germany specifically, also offer value.

As of this writing, Japan has erased all of its gains for 2015, Brazil is a hot mess, India's Sensex is down 17 percent from its high after being one of the best-performing markets in the world, Russia should never, ever see a dime of your money and China has proved, as I have thought for some time, more mirage than miracle.

Stay home. Bet on the U.S.

Do not get spooked by the Fed. If it raises rates at all, it will be for mechanical reasons only.

The U.S. remains 70 percent consumption and 13 percent exports. We are increasingly energy self-sufficient.

Manufacturing is coming home. Technological innovation outpaces that of the rest of the world.

U.S. demographics are far more favorable than in most other developed, and some developing countries, as family formations are beginning to accelerate again.

The world, our world in particular, looks more normal today than it has in several weeks.

I expect the bull trend to resume into the end of the year, albeit in fits and starts, but I also believe the worst is now behind us.

Enjoy an autumn without another fall on Wall Street.

P.S. There is an adage on Wall Street suggesting that you "Sell Rosh Hashanah and Buy Yom Kippur." If true, expect two more weeks of volatility and then a big rally into final holiday season of the year!

Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. Follow him on Twitter @rinsana.