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Crude oil’s plunge could actually be good news for stocks

If oil keeps plunging, can stocks keep holding up?

The recent weakness in crude oil could prove to be a positive for equities, according to one chart-minded strategist.

WTI crude remained below $50 per barrel early Friday, already having slipped nearly 6 percent this week, but stocks were steady as the and Dow Jones industrial average were in the green. Crude oil supply in the U.S. has reached record highs, fueling some doubts about OPEC-led agreements to curb production.

Before the November production agreement, low oil prices were considered a bearish sign for stocks. Now, however, Oppenheimer technical analyst Ari Wald said he's not concerned about sinking crude oil prices' effects on equities.

"In fact, I think for the long run this could be quite positive," he said.

In looking historically at crude oil's 52-week rate of change, Wald found that the worst forward performance in the S&P 500 occurred when the price of crude oil was higher per barrel. A high rate of change for oil is a proxy for an "economic boom," Wald said Thursday.

"Overall, stocks ex-those tied to oil prices, should continue to do well as long as oil prices are low and stable, and avoid a steep run-up," he wrote in an email.

In an interview on CNBC's "Trading Nation" Wald said that if anything, the recent downturn in crude has removed a potential headwind for stocks not directly tied to oil prices.

Oil could continue to weaken, given the likelihood of a Federal Reserve interest rate hike, which could strengthen the U.S. dollar and slow economic growth, said 55 Capital Partners strategist Max Wolff.

"Both are bad for oil," as well as for stocks, Wolff said. "We see the commodity space and oil as a better economist than the markets lately."

Historically, the S&P 500 rarely finishes higher in weeks in which crude prices have declined significantly, according to a CNBC analysis using Kensho technology.

Indeed, the S&P 500 and Dow Jones industrial average are both on pace for their worst week of 2017.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.