Many pundits have suggested that Chinese stocks are in a new bull market, having rallied 20 percent off their bear-market lows. I don't think that's what's happening here.
A bull market is a strong cyclical, or secular, up move that is broadly supported by a wide variety of stocks.
After plummeting nearly 50 percent from its mid-year peak, the 20-percent bounce, while tradable, hardly gets you your money back.
I think this is more of a bear-market rally. The polar opposite of a bull-market correction, bear-market rallies are often wrongly greeted with great brio as many are fooled by the bear trap.
Certainly, in the case of China, there have been few, if any, signs of a positive shift in the underlying economy, even though the market has jumped.
True, consumer spending has improved, as China tries to re-orient its economy away from export-led growth to consumption-led growth. But, and this is a big but, other indicators associated with more robust activity in China continue weaken, creating a negative divergence between stock-market performance and other market-based indicators.
Raw-materials prices continue to plummet, suggesting that China's industrial engine is sputtering further. Iron ore prices fell below $40 per metric ton in Singapore on Monday, for the first time ever, reflecting plunging Chinese demand. So, too, the price of copper, which is flirting with multi-year lows, while the Baltic Dry Index plunged to record lows recently, all of which suggests a deepening recession in China's manufacturing sector.
Given the softness in global manufacturing, including here at home — the Chicago Purchasing Managers' Index was another such example on Monday — a negative feedback loop is growing more obvious day after day.
Instead of a virtuous circle in global economic activity, China may be leading a vicious cycle of slowing growth.
If the bear-market bounce in Chinese share evaporates completely, and the Shanghai Composite takes out its summer lows, down around 3,000, the message of that market may not only be interesting but ominous. The Federal Reserve would do well to remain interested in China, lest the times, here at home, become even more interesting, as well.
Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. Follow him on Twitter @rinsana.