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Will the oil plunge derail stocks into year-end?

Can stocks rise as oil falls?
Can stocks rise as oil falls?
Labor costs to hit stocks in 2016?
Labor costs to hit stocks in 2016?
Play the crude collapse?
Play the crude collapse?

Oil and energy stocks got off to a rough start in December, with the S&P 500 energy sector down more than 12 percent month to date. And the dramatic plunge in crude oil prices seems to be seeping into the broader market as the close of the year approaches, market participants say.

"I'm not sure they're linked at the hip," Max Wolff of Manhattan Venture Partners said Tuesday, but "there are definitely some staples and some sutures in there."

The has fallen 1.7 percent this month, but the index is still up incrementally for the year. Wolff said that while consumer savings on heating oil, transportation and gas prices have helped push up stocks, the benefits may not hold much longer.

"What I think we've seen is an extension of rally that was long in the tooth and fueled largely by cheap money," from lower oil prices, Wolff said Tuesday on CNBC's "Trading Nation." "It won't be such a positive for forever, but it has been for a while."

Read MoreThe 4 energy stocks trading at decade lows

Crude oil prices have been badly beaten this year thanks to record high petroleum stockpiles and production. But the commodity took a turn for the worse this week as the Organization of Petroleum Exporting Countries decided not to cut output amid a widening supply glut.

Crude oil settled down slightly on Tuesday below $38 a barrel. According to Phillip Streible of RJO Futures, oil could end up pushing as low as $32, which would be another 15 percent drop for the commodity.

Read MoreEnergy plunge intensifies; 'sell, underweight or avoid'

All major U.S. stock indices are in the red for the month, and as the year end draws closer, Streible said the oil plunge has put investors on edge. However, some money managers may take advantage of the lower prices to bet on a pop coming into 2016, he said.

I think we've got a little bit of desperation going on right now, people are trying to lock in gains," he said Tuesday on "Trading Nation." "We're going to pull back just a touch here."

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