With gold, crude oil and other commodities falling, several S&P sectors have taken a big hit. But as the popular CRB commodity index drops to new four-month lows, traders say this is actually a good sign for the S&P 500.
"It's more of a concentrated weakness," Ari Wald, head of technical analysis at Oppenheimer, said Tuesday on CNBC's "Trading Nation." "We'd be staying away from these commodity-exposed stocks, but for the market as a whole, we don't think it's very bearish. We think the S&P 500 can continue to do well."
Energy stocks are down more than 10 percent for the year, while the utilities sector has fallen over 9 percent. Materials and industrials are both down about 3 percent.
But according to Wald's chart, since 1957 the S&P as a whole has actually performed better when commodities are trending lower. When the Continuous Commodity Index falls below its 200-day moving average, S&P returns increase, Wald said. When the commodity index rises above its 200-day moving average, S&P returns tend to fall.