By Rick Glaze

The stock market sold off last week to start off the month in negative territory.

Traditionally, October is a volatile month for stocks, but some analysts believe a sell off will set the stage for higher prices later in the quarter. Solid earnings and low inflation could support that contention but high-energy bills will translate into some degree of dampening for the economy.

The Standard & Poor’s 500 and 600 were off 2.7 percent and 3.3 percent while the Nasdaq index was lower by 2.9 percent for the week.

A negative jobs report for September was viewed as positive because the Hurricane Katrina job losses were less than predicted. The strength in the overall national economy held the job losses to 35,000. Some pundits feared the number would be closer to 150,000.

The real effects of the hurricane related job losses are not expected to be reported until next year. By then, massive reconstruction may have begun adding momentum to job growth figures. In August, job growth was reported as a robust gain of 211,000.

Oil rose 48 cents a barrel, but capped off its worst week since a sell-off in late April. Of course, “worse” is relative because many readers of this column think lower is better. Some polls report that consumers are not changing their habits even in the face of $3-plus for a gallon of gas. But rest assured, everybody is thinking about it. If oil were to drop further and job growth stays strong, the market could in fact be set for another advance.

Earnings season has begun and corporate profits will be reported over the next few weeks. These reports are the underpinnings of stock growth and serious investors pay close attention to them.

Rick Glaze is the president of Glaze Capital Management of Los Altos and is a registered representative of and offers securities through First Allied Securities Inc.