National recession is becoming visibly deeper and no one knows how long the economic decline will last. Nor do we know if we're headed for a more severe collapse than our experience in the mid-1970s, but such a crisis now appears possible.

Unemployment has soared to 7.8 percent and that doesn't measure some of the most recent layoffs. Auto sales plunged 37 percent in May. Consumer borrowing has dropped sharply.

Often, the stock market provides some clues about the future. Investor psychology, really a reflection of confidence, has been at a low level for a long time. By virtually every historical measure, common stocks of American businesses are dirt cheap.

Essentially, the market has been foundering ever since 1966. Historians probably will say that investor confidence began at that time to reflect the accumulated evidence of the end to postwar boom in the 1950s and 1960s. Also, developments in Vietnam and the Middle East depleted resources and raised questions about the resolve of the American people in a new world of challenges to our wealth -- questions still largely unanswered.

What we'd all like to know, or course, is the market's advance word on the balance of 1980. Stock prices have become more stable as additional evidence is published about the slide into recession, perhaps indicating that the market has hit bottom.

Washington area blue chips, as measured by the Johnston, Lemon index of 30 stocks, have been marching steadily higher since late March in what looks like a definitive turnaround, closing last week at 118.099 compared with 115.696 a week earlier.This could indicate that investors think regional business here won't suffer too much in the recession that began in January, although local business people are prepared for hard times.

At the same time, the Dow Jones average of 30 New York Stock Exchange blue chips has not registered a convincing statement. It has moved up as well as down, although it is up about 100 points in the recent six weeks, having closed at 861.52 on Friday.

This barometer is closely watched and quoted most often as the American stock market indicator, but the 30 companies measured represent just a quarter of the market value of all NYSE stocks. Broader market measures (Johnston, Lemon includes over-the-counter and American Exchange stocks as well as those on the Big Board) are probably a better guide to investor moods.

There are as many theories about investing and predicting the future through Wall Street trends as there are stocks listed on the New York exchange. One of the more unusual approaches in the Washington area is the creation of Ken Hooley, a resident of Annandale who was a NYSE-registered representative from 1954 to 1968, including 13 years at Ferris & Co. Hooley started technical analysis of the market in 1962 and has been at it ever since, expanding on the "wave" theory.

Hooley brngs a varied background to the volatile world of stock analysis. He holds an M.A. in music from Catholic University, has been a band and choral director for churches and schools, and was an airplane pilot from 1955 to 1973. Since retiring as a stock broker, he has earned a living mostly by selling insurance. His stock market analysis has been mainly a hobby -- but a consuming one, at that: Hooley said development of his own market techniques hs cost him $100,000 over 12 years. He has had no high-paying institutional clients to foot the bill but several area investment people think Hooley has a worthwhile innovation.

The foundation of Hooley's technical analysis is a theory of market movements in succeeding waves, developed by an American student of market cycles, R. N. Elliott, who divided each market advance cycle (bull market) into three upward waves and one downward swing, and each declining market (a bear market) into two downward swings and one upward cycle. To Elliott's waves, Hooley has added his own projections based on trading volume and fundamental analysis of business prospects.

Looking over his charts and books, Hooley has concluded that the Dow industrials are about to reverse course. The Dow could go as high as 885, after which there would be a downward "test" of the market's most recent bottom (759 in April). If the Dow falls below that level, it probably would be followed by a big rally and then another downside plunge toward the 577-610 low hit in the 1974 recession, Hooley said.

If such a point is reached, there are two possible future scenarios. One is bleak while the other would point to a major upward business cycle. The good news would be a strong and sustained stock market advance well into the 1980s, "a major bull market," in Hooley's words. It would take place if the Dow does not fall below the 577 level, according to his current analysis.

The bad news would develop if the market, as measured by the Dow industrials, plunges below 577. Then, according to the Hooley charts and techniques, the Dow could drop all the way to a range of 140-505 about a month before election day in November. This obviously would be a painful development for President Carter.

But such a low point for the Dow (last registered in the mid-1950s as part of an upward market wave) also would mean, according to Hooley, "that the market was ruptured," that it would fluctuate for two to four years between that bottom and 750-800 "at most," before the major bull market finally got started. It would reflect deep recession.

In addition, Hooley predicted that such a market collapse would be accompanied by an unprecedented selling volume of 145 million shares or more on a single day, eclipsing the 80 million shares traded on one day last fall after the Federal Reserve Board finally moved to tighten credit expansion and half the inflationary cycle of recent years.

In the wake of the October actions and subsequent government decisions, interest rates soared to a peak earlier this year and now are falling more sharply than anticipated. Hooley said that if the prime rate (charged by a bank to leading corporate borrowers) peak of 20 percent is not tested again in the near future, the prime could fall to 9 percent or lower and stay there for some time.

"The implications of this are that the recession could be a lot deeper and last a lot longer than people believe. And if it is true, it lends credence to a possible break in the Dow to the lower levels," Hooley added.

Hooley accompanies his suggestions about possible trends with a great deal of caution. He warns that investors are foolish to look at technical analysis of market activity in isoslation, without study of fundamental economic developments across the globe. He suggests investors concentrate on strong companies in sectors that will be least vulnerable to recession, such as energy, computer technology and aerospace Boeing and Fairchild Industries, a Montgomery County company, both are expected to post substantial profit increases in 1980).

You also should know something about Hooley's recent track record. He was forecasting major gains for investors with gold stocks starting late last August and indicated they should pull out of such investments on Jan. 3, as fold prices were peaking. Several private investors he was advising made substantial profits. Last week, he predicted continued "horizontal consolidation" of gold prices and another decline in prices, even as gold prices topped $600 an ounce on Friday. "This is no time to buy gold, expecting it to go up."