Per Bloomberg, this is the biggest 10 day rally since 1938.  The relief is visible on the faces of our “vaunted” CNBC hosts and in the voices of the many financial pundits from the WSJ and other financial papers.  They are all acting like everything is fine, well, it’s not. 

On the outside, the recent gains suggest the market may have turned the corner.  However, if you look back through the history of the market this is more likely a bounce from lows and not a recovery.    

Along with historical data suggesting it is just a bounce, the economic and market data does not suggest a recovery:

• Housing is still declining, though at a slower rate. This is good news, but not great news. (Yes, you have seen headlines stating housing saw an “unexpected rebound” in February. This is incorrect. Housing sales did go up from January to February, but they always steadily go up from January and peak in mid/late summer. This happens in good times and bad. If you compare February ‘08 with February ‘09 you will see that housing stats are still declining)
• “As to the overall economy bottoming, not only is there no evidence of that, but the leading indicators (ECRI, LEI, etc) all suggest the opposite: The economy is likely to get worse before it gets better.” - The Big Picture (Mr. Ritholtz has been very accurate during this downturn)
• “A large portion of the recent buying was from investors and institutions covering their short positions. This is especially true concerning financial stocks.” (CNN Money) Overall, this is slightly positive for the long-term, but probably means the rally won’t have legs over the short-term once the bulk of the shorts have covered.

Based on this information, I plan on selling at least 15-20% of my portfolio this week, as long as the market stays fairly positive.  I see no reason the market will stay at this level long-term, and I expect we will retest the lows at some point.  Thus, I will take a modest profit on some of my investments and wait for another buying opportunity.