A money supply level generally below what had been expected.

Soaring profits at regional banking firms.

Rumors - denied - that oil was struck off the Atlantic Coast.

A sudden increase in institutional stock purchases from both American and foreign investors.

These were four of many factors cited by local stock brokers yesterday as they attempted to explain a record day for trading and a sharp increase in stock prices of every category. Without exception, local securities analysts and sales people forecast a continuation of the market gains on Monday.

"My phone started to ring at 7:30 a.m.," recalled James Logan, senior vice president at Ferris & Co.

"Whoopie-do, isn't this exciting? I've been in business for 10 months and this is the only thing that's happened," said Julia Montgomery Walsh, whose Walsh & Sons investments firm opened last year.

Actually, the national market boom that was registered yesterday by the New York Stock Exchange's blue chip industrial corporations had been preceded for several months by sharp gains for so-called secondary issues on the American Stock Exchange and in the over-the-counter market.

Local companies participated in the increase over recent months and they continued in the parade yeaterday.

Johnston & Lemon Co. Inc.'s stock index of 30 Washington area corporations began a steady increase as long ago as last June. Since early March, however, the local index has been soaring higher every week.

Yesterday, the Johnston. Lemon index hit a record high of 89.506 (1970-1971-100), up 1.257 for the day. But the record daily increase for the local index occured on Thursday, when it jumped 1.448.

For the week, the area stock masurement rose a record 3.439. Volume was extremely heavy for many local stocks all week.

The market rally came as no surprise to Walsh, a frequent guest panelist on public television's "Wall Street Week" program. On Feb. 10, she had forecast that the market would turn around with "a very nice rally."

Yesterday. Walsh said that investors had discovered that, "If you look around the world, equities represent the best buy in the economy today, if you have any faith at all."

Institutions that had sold stocks over the last two years and set aside large amounts of cash are back buying, she noted. Earlier this week, former Government Employees Insurance Co. chairman Lorimer Davidson revealed that his firm had decided to buy stocks again for the first time in several years, for example.

Patrick Ryan, vice president in charge of trading at Dean Witter Reynolds in International Square, said yesterday's broad advance "took off on the [opening] bell -- it just snowballed."

At Ferris & Co., over-the-counter trading volume yesterday was a record. Logan called institutions "the driving force" behind the gains, one which represented a basic change "in their point of view" about the economy.

Among individual issues yesterday, Allegheny Airlines was fifth most active on the Amex, up 25 cents to $7 on a volume of 95,200 shares. The company's revenues have been growing strongly and airlines in general have attracted investor interest.

Kay Corp., which owns the Kay Jewerly Stores, was the third-biggest percentage gainer on the Amex, up $1.50 (14.6 percent) to $11.75 after company officials told securities analysts that jewelry earnings should grow 25 percent a year for the next five years.

Hechinger's, which recently reported record earnings for the last fiscal year despite initial costs for a new warehouse-headquarters complex, rose 3/8 to a new high of $8.50 bid, $9 asked in OTC trading: Communications Stallite Corp. soared $3.25 to $41.125 on the NYSE. and The Washington Post Co. rose $1.375 to $37.875 on the Amex.

Gieco rose 12 1/2 cents in heavy volume to $7.625. Scope added 37 1/3 cents to $16.875, and Noland Co., rose 37 1/2 cents to $9.50 in other OTC trading.Riggs Bank, following a sharp first quarter profit gain, remained unchanged yesterday at the new 1978 high of the previous day - $35.25, up $1 for the week.