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Here's what happens to the market if the health care bill goes down in flames

Dumpster fire
Baloncici | Getty Images

Overbought. Technically tired. There are more sellers than buyers. These phrases describe the state of the stock market in the last session-and-a-half.

No doubt, the stock market is long overdue for a correction, after a scorching rally since the election, and a solid start to 2017. Stocks went 109 days without a 1 percent daily decline, a relatively unusual duration.

There is no doubt the market can fall further amid a variety of obvious concerns. The fate of "repeal and replace" means a few very important things to Wall Street.

First, though infrequently discussed in detail, the failure of the American Health Care Act (AHCA) to pass the house and/or Senate means there will be no reduction in the 3.8 percent capital gains tax surcharge on wealthy individuals.

That tax, used to fund Obamacare is on the chopping block in the current GOP bill and would have provided a retroactive tax cut to stock market investors.

Second, the failure of the AHCA would delay, if not imperil, the Trump/GOP agenda going forward, meaning that comprehensive tax reform (and tax rate reductions) could be pushed off until 2018, or later. The market has priced in a nearly immediate passage of new tax legislation.

Infrastructure spending and increased defense outlays could also be delayed as the White House struggles to pass a budget.

Hence, the "Trump Bump" could turn into the "Trump Dump" if his legislative agenda is derailed.

Granted, it is far too early to make claims that such will be the case, but the president is struggling unexpectedly in his first 100 days in office. The art of the deal is looking a little less artful every day.

FBI Director Comey's testimony, before Congressional Intelligence types, leaves the president "under a cloud," as was suggested by a key Republican congressman.

"The 'Trump Bump' could turn into the 'Trump Dump' if his legislative agenda is derailed."

These distractions, for lack of a better description, may prove transitory and the House might very well muster the necessary votes to pass the AHCA on to the Senate. However, there is no guarantee the Senate will get the bill to the president's desk.

Policy uncertainty, in my view, was largely the reason the market moved so much in Tuesday's sell-off.

But there are other concerns, some obvious, some less so.

GDP estimates, for the first quarter, continue to slide toward a paltry 1 percent growth rate. Earnings estimates are also being cut; only weeks after analysts were projecting 10-12 percent corporate profit growth in 2017.

Wednesday's home sales data were disappointing as housing affordability is declining amid rising prices and rising rates.

Overseas, the picture isn't any brighter.

There are political concerns in Europe, with the rise of ultra-nationalists in France, Germany and Italy, even though just such a challenge was just beaten back by the Dutch.

India's economy appears to be slowing, while there are strange moves in China's interest rate market. The cost of overnight money, in China's interbank lending market, spiked in recent days without a clear explanation as to why.

Chinese officials are also trying to slow the renewed inflation of their real estate bubble which, if popped, may be the burst heard 'round the world.

The other risks, that would literally involve shots heard 'round the world, deal with U.S. plans to confront ISIS in Syria, or the on-going advancement of nuclear capabilities in North Korea, either of which could deliver an unwelcome geo-political challenge.

As a consequence, we've seen a sharp drop in risk assets in the last 48 hours with a flight to quality assets like gold and U.S. Treasury bonds.

Corrections, by their very nature, are short, sharp and scary. And, for now, I suspect the pullback in stocks is nothing more.

A 5 percent to 10 percent decline would be normal, indeed, welcomed by those who believe, as I do, that the bull has more room to run.

Having said that, a big disappointment in Washington, a sudden downturn in domestic, or global economic activity, an aggressive markdown of earnings expectations, or an expansion of militarism could bring about a deeper, and more concerning decline in the stock market.

As has become the norm with this new Administration, investors must take it one day (some would say one tweet) at a time and learn to separate real news from the noise.

It's very noisy right now and may take a little time before we know if the expectations that drove the market higher will be met or end in regret.

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

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.