If the market for big stocks is depressed, then the market for small stocks seems almost lifeless.
Signs of distress in the over-the-counter market include trading volume, which has fallen to its lowest level in almost two years, and prices, which have fallen relentlessly to the lowest levels in several years for many stocks. Prices are falling much more rapidly than among larger stocks.
While the big NASDAQ stocks -- like Apple Computer, MCI Communications and Intel -- trade generally in line with the large stocks on the New York Stock Exchange, the smaller stocks, the ones that are not household names, have suffered the greatest carnage.
The best-known mutual fund that specializes in small stocks, the T. Rowe Price New Horizons Fund, had one of its worst quarters RTC in history in terms of performance, losing 26.4 percent of its value, and it fell further in October.
Still, Steve Norwitz, a spokesman for T. Rowe Price in Baltimore, said that investors put more money into the New Horizons Fund last month than they took out.
Volume for these small stocks has all but dried up, and prices have fallen the fastest.
"A few dozen stocks account for most of the volume on NASDAQ now," said Peter DaPuzzo, the co-director of worldwide equities for Lehman Brothers, one of the largest NASDAQ market makers.
"If there are 4,000 stocks on NASDAQ, I'd bet 400 stocks do 80 percent of the volume. Once you get past the first few hundred, there is very little interest."
Since July 16, when the Dow Jones industrial average reached a peak of 2,999.75, it has fallen 18 percent.
At the same time, the NASDAQ composite index is off 30 percent, having reached a three-year low last month.
The Value Line composite index, another measure of small-stock performance, is at its lowest level since 1985.
Many reasons have been advanced for the poor performance of small stocks, ranging from suggestions that smaller companies are less likely to have the financial wherewithal to survive a recession to a belief that professional money managers find it easier to justify losses in big stocks than in small ones, and therefore sell the smaller ones first when things get tough.
There has always been more trading in large stocks than small ones, of course, but for a period this spring, trading on NASDAQ came alive.
In May, as stocks rallied across the board, trading volume on NASDAQ averaged 158 million shares a day, the second highest monthly figure ever, trailing only the crash month of October 1987. Volume that month came to 96 percent of the Big Board's average turnover of 163 million shares a day, and in June, while NASDAQ volume slipped to 149 million shares a day, that figure was a record 97 percent of the New York Stock Exchange figure.
June was also the last month that small stocks performed about as well as large ones in terms of price. Since then, as share prices have fallen, the trading volume on NASDAQ has dried up.
In October, NASDAQ volume averaged 117 million shares a day, only 73 percent of the Big Board figure, itself a none-too-impressive 160 million shares. That is the lowest market share for NASDAQ since late 1988.
That volume has not been greater may be an indication of complacency on the part of investors in small stocks.
By and large, some brokers report, individual investors have resisted the temptation to liquidate their portfolios as prices have fallen, choosing instead to hold on and hope for a revival.
The Dow peaked in July, but smaller stocks generally peaked months earlier.
The NASDAQ composite hits its record high just over a year ago, and the Value Line index has yet to top the highs it set before the 1987 crash.
Small stocks have been underperforming for the better part of a year, but the relentlessness of the fall is the most striking part of what has begun happening to small stocks recently.
Eventually, of course, such a string has to end. But Hugh Johnson, a market strategist at First Albany, notes that some of the worst bear markets in history, including 1974-75 and the depression that began in 1929, have begun with small stocks caving first, and then underperforming even after the big stocks began tumbling down.