Question: Is the Dow average really a good indicator of the stock market? I've watched some of my stocks go down when the Dow went up, and up when the Dow went down. I imagine others have run into the same thing. So how useful is the average to the ordinary investor?

Answer: I'm sure you're talking aobut the Dow Jones industrial average; there are two other "Dows," you know -- the transportation average and the utility average.

The Dow Jones industrial average is based on the stocks of 30 major industrial companies. The value of those 30 stocks addd up to perhaps a quarter of the value of all stocks listed on the New York Stock Exchange.

The decisiosns as to which stocks to include in the average are made by the Dow Jones Company (which publishes, among other things, the Wall Street Journal).

Changes in the composition of the index are made only rarely, to reflect major changes in corporate fortunes or industry trends. Calculations are revised regularly, however, to maintain continuity and avoid distortions caused by events such as stock splits and stock dividiends.

The Dow industrial average is undoubtedly the most closely watched and most often quoted indicator of market trends. In fact, as you have found, it doesn't provide a clue to the movement of individual stocks, even though it does offer some indication of general market sentiment.

The selection of the stocks included in the average is critical to its value. An article in U.S. News & World Report back in July, 1979 made this point rather vividly.

IBM was one of the stocks in the average from 1932 until 1939, when it was replaced by AT&T. (IBM was returned to the average in 1979 when Chrysler was dropped.)

According to the magazine artricle, if the 1939 change had not been made and IBM had remained a part of the average, the Dow would have been above 1700 in 1979 instead of at the 850 level it was then. The average was effectively halved by this one change way back in 1939.

Despite its popular acceptance, you might get a better indication of market price movement by watching the New York Stock Exchange index or the Standard & Poor average of 400 induatrials or 500 stocks -- all quoted under "Market Indicators" in the daily financial section of The Washington Post.

More importantly, remember that all of these indices are only indicative of overall market movement. Individual stocks will move in response to other factors, which may cause a specific stock t react in an opposite direction from the trend.

Q: I heard that the interest in U.S. savings bonds is up again. I don't recall reading anything about this. What's the latest?

A. You heard right, but th news is two months old. Interest on Series EE bonds purchased after April 30 (and held to maturity) rose from 8 percent to 9 percent.

The term to maturity was dropped from nine years to eight, and intermediate yields -- for bonds cashed before maturity --- went up correspondingly.

The maturity dates on Series EE and Series E bonds purchased before May 1 have not been changed, but the overall yields on these earlier bonds also go up by one percent, effective with the first semi-annnual interest period beginning after April 30.

Interest rate on Series HH bonds bought after April 30 has also been increased, up from 7 1/2 to 8 1/2 percent. bThe yields on older Series HH and Series H bonds have been similary sweetened.

Interest on all U.S. savings bonds is subject to federal income tax but exempt from state and local taxes. The tax on Series EE and E bond interest may be deferred until the bonds are redeemed, if you wish. (Series HH interest is taxable in the year received.)

About 36 million recipients of Social Security checks found an 11.2 percent increase in their benefits beginning with this month's payment.

This increase was automatically triggered by an equivalent increase in the average monthly Consumer Price Index for the first quarter of 1981 as compared with the same period in 1980.

A budget note: The cost of this benefits increase for fiscal 1982 is estimated at $15.4 billion.