In the resting state, cortical neurons can fire action potentials spontaneously but synchronously (Up state), followed by a quiescent period (Down state) before the cycle repeats. Extracellular recordings in the infragranular layer of cortex with a micro-electrode display a negative deflection (depth-negative) during Up states and a positive deflection (depth-positive) during Down states. The resulting slow wave oscillation (SWO) has been studied extensively during sleep and under anaesthesia. However, recent research on the balanced nature of synaptic excitation and inhibition has highlighted our limited understanding of its genesis. Specifically, are excitation and inhibition balanced during SWOs? We analyse spontaneous local field potentials (LFPs) during SWOs recorded from anaesthetised rats via a multi-channel laminar micro-electrode and show that the Down state consists of two distinct synaptic states: a Dynamic Down state associated with depth-positive LFPs and a prominent dipole in the extracellular field, and a Static Down state with negligible ( ) LFPs and a lack of dipoles extracellularly. We demonstrate that depth-negative and -positive LFPs are generated by a shift in the balance of synaptic excitation and inhibition from excitation dominance (depth-negative) to inhibition dominance (depth-positive) in the infragranular layer neurons. Thus, although excitation and inhibition co-tune overall, differences in their timing lead to an alternation of dominance, manifesting as SWOs. We further show that Up state initiation is significantly faster if the preceding Down state is dynamic rather than static. Our findings provide a coherent picture of the dependence of SWOs on synaptic activity. KEY POINTS: Cortical neurons can exhibit repeated cycles of spontaneous activity interleaved with periods of relative silence, a phenomenon known as 'slow wave oscillation' (SWO). During SWOs, recordings of local field potentials (LFPs) in the neocortex show depth-negative deflection during the active period (Up state) and depth-positive deflection during the silent period (Down state). Here we further classified the Down state into a dynamic phase and a static phase based on a novel method of classification and revealed non-random, stereotypical sequences of the three states occurring with significantly different transitional kinetics. Our results suggest that the positive and negative deflections in the LFP reflect the shift of the instantaneous balance between excitatory and inhibitory synaptic activity of the local cortical neurons. The differences in transitional kinetics may imply distinct synaptic mechanisms for Up state initiation. The study may provide a new approach for investigating spontaneous brain rhythms.