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On the first anniversary of 1982's spectacular market launch, stocks were on their way down. But the nature of any market -- bull or bear -- is to correct its excesses and certainly the roaring bull that was born a year ago in August struck rarefied air this summer. Some price deflation was indicated, influenced simply by the natural ebb and flow of stock ownership. However, the adjustment in stock market averages that did take place over the next few months was unusual. The Dow Jones Industrials and Standard & Poor's 400 not only held their ground, but they actually managed to advance. To many observers, it appeared that a correction had not yet arrived. But the observers were wrong.

Among amateur market players, the trend seems to be dictated by home computers and the simple Wall Street programs they run. Investors have become more sophisticated -- or at least they think they have. Just about everybody nowadays embraces the theory of contrary opinion -- that the market never does what everyone expects it to -- simply because it is an easy principle to espouse and follow; you don't have to do any real thinking. It is fascinating, though, to see how the market manages to confound, as if it had a sentience of its own. With the consensus waiting for the correction in the popular averages, the contrary view was to assume there would be no correction of significant proportions. So, to a large degree, small investors failed to sell in time to take advantage of July's peak in stock prices. On the face of it, they were right: The market never did come back down as might have been expected. Instead, in September and October, the DJI kept forging record highs. But as this apparent strength was evidenced, many industry groups were undergoing corrections on their own.

A considerable number of investors missed the signs. Anyone who held the stock of a small computer-oriented company, for example, or medical-instrumentation issues was likely to have felt the pain of holding on too long. (You have to weigh the tax advantages down the road against taking the immediate profit, obviating the risk of declining prices. In many cases, it turns out that it pays to sell at the top of an intermediate-term rally, whether or not long-term capital-gains status has been achieved.) A conclusion that ought to be reached in this instance is that it is important not to judge the market solely in terms of how the averages are doing. More homework than simply following contrary opinion is needed.

One notably deflated group was the IPO aftermarket. After monthly gains that ran as high as 88% for a three-month investment in every new issue that came out in a given month, none of the three groups of public offerings charted by INC. managed a gain (see graph, page 167). An even more significant fizzle, at least proprietarily, was the INC. 100 Index, which, at the beginning of October, had sunk to sixth in a six-average list. Being last in a declining market is not unfamiliar territory for the INC. Index, however. It has dipped there several times before and then gone on to recover strongly. While many companies on the INC. list have been hit hard (Apple Computer, for example, declined from a high of 62 3/4 to around 20, due to severe flattening of earnings; Healthdyne dropped precipitously from 40 3/4 to under 25; Reeves Communications hit a high at 28 1/2 and tumbled to under 12), a major reason for the Index's volatility is in the nature of its makeup. Unlike other averages, such as the Dow Jones lndustrials, which are entirely weighted according to stock price, or S&P's, which is weighted according to capitalization, the INC. Index, like Hambrecht & Quist's, is a semiweighted statistic. Each INC. entrant is given a "weight" -- a proportionate influence on the average -- when the list is coinpiled every year, and that weight stays with it for the next 12 months. INC. "buys" $100 worth of the shares of each company in May, thus fixing the number of shares of that company that affect the monthly calculation. Large price swings in issues bought cheaply take a toll on the list.

But that doesn't excuse INC.'s foundering. In fact, with relatively high interest rates here to stay, and many of the markets that INC.-type companies have sought out being sorely squeezed by sheer numbers of greedy new entrants, small, fast-growth technology companies were jettisoned by investors when it became apparent that any number of them were boxed in with nowhere to go. But for those who feel that technology, once a market leader, will come back, there is a neat way to participate in the postcorrection boom. After the dust settled from the explosion in index options, the American Stock Exchange devised options in a proprietary Computer Technology Index and opened them to trading in August. These are the stocks, several of which are ex-INC. 100 companies, on the Index: Amdahl, ADP, Burroughs, Commodore, Computer Sciences, Control Data, Cray, Data General, Datapoint, DEC, Electronic Data Systems, Hewlett-Packard, Honeywell, IBM, Lanier, Mohawk Data Systems, Motorola, National Semiconductor, NBI, NCR, Paradyne, Prime, Sperry, Storage Technology, Tandy, Telex, Texas Instruments, Tymeshare, Wang, and Xerox. The option prices are published daily in the financial press.