Wall Street bears lacking firepower despite help from China, oil

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China’s renewed stock market selloff this week and crude oil’s surprising surge might otherwise have been excellent excuses for a pullback on Wall Street.

Except that it’s August, and there might not be enough engaged human investors in the market to care.

‘The market should be starting to correct, but it’s not going to correct because there’s no one around to sell,’ says Dave Rovelli, head of equity trading at Canaccord Adams in Boston.

That’s hyperbole, of course. Yet despite some volatile sessions in the last couple of weeks, major U.S. market indexes are about where they were when the month began, and haven’t lost much from their recent highs.

The Standard & Poor’s 500, at 996.46 on Wednesday, was off a mere 0.6% from its close of 1,002.63 on Aug. 3.

So the lucky ranks of investors who’ve fled to the beaches, mountains or their own backyards this month haven’t missed much of anything by not paying attention to the market.

It could have been worse given mounting warning signs of a near-term peak in share prices, including a sharp jump in bullish sentiment in the first half of the month.

Then, when China’s hot market began to tumble, it seemed to be a logical bell-ringer for markets worldwide after July’s big gains.

China may yet turn out to be a harbinger of trouble for global stocks. But the Shanghai market mostly traveled alone in its 19.8% plunge from Aug. 4 through Wednesday. (It regained 4.5% on Thursday.)

Measured from its nine-month high reached on Aug. 13, the S&P 500 was down just 3.3% through Monday’s close, before rebounding 1% on Tuesday and 0.7% on Wednesday.

Among other markets, the pullbacks this month have been no worse than 4.7% in Germany, 3.7% in Japan and 3.6% in Mexico.

Outside of China, stock bulls and bears may have reached a kind of stalemate for the moment, waiting for more signs of economic recovery -- or of renewed weakness.

Is oil pointing to the former? Crude futures in New York rocketed $3.02 a barrel on Wednesday to finish at $72.21 after the government reported a steep drop in U.S. inventories last week, suggesting tightening supplies.

But analysts were at a loss to explain the size of the shortfall. ‘There was no story to justify it,’ said Stephen Schork, an energy analyst in Villanova, Pa. That didn’t stop traders from pushing oil to just below its 2009 high of $72.68 a barrel reached in mid-June.

Technical trading factors may overtake the fundamentals if oil-price optimists can get futures above $75, Schork said. ‘$75 is the number the permabulls want to gun for,’ he said. Reaching that level could trigger short-covering by market bears that could quickly get the price to $80 or even $85, he said.

The stock market clearly isn’t worried about oil at $72 a barrel, and may even take encouragement from it. But the trend at the gas pump is going the wrong way for any investor who’s concerned about the financial health of cash-strapped consumers and their ability to help spend the economy into a lasting recovery.

It may just take until September to get enough people back on Wall Street to think it all through.

-- Tom Petruno