Yes, for the near term. Dow leapt 497 points. S&P 500 soared 7.1% to 822, its biggest gain since October 2008. Geithner’s plan will benefit the financial stocks, so obviously all financial stocks went up dramatically yesterday. Wall Street is happy that somebody is going to own the toxic assets and banks don’t need to worry about those bad assets anymore.

Did we just cross the bottom? I don’t think so. For starters, fundamentals are not changed. Unemployment is still the same. Existing home sales improved a little bit. February sales increased 5.1% month to month to a seasonally adjusted rate of 4.72 million. Economists expected a 0.9% decrease to 4.45 million. This number may be misleading because of high number of foreclosures across the country. What I mean is that although the number of sales is improved, you have to look at the quality of the sales. We will get the report of new home sales on Wednesday. That may tell the true story of what is happening in housing market.

Overall the market has positive bias. Major corporations are scheduled to announce earnings in the coming weeks. Market will change the direction depends on the quality of the earnings. Walgreen missed earning estimates yesterday. Jewelry retailer Tiffany’s reported slightly better earning but its revenue fell 20% year over year. It also issued downside guidance for current fiscal year. We have to look for earnings from Citibank, Bank of America, JP Morgan Chase, Goldman Sachs and Wells Fargo to get an idea about the health of the banks and also to gauge the effectiveness of stimulus package. Earnings from GE, Caterpillar, P&G, Wal Mart, Merck, General Motors, Home Depot, Microsoft, Hewlett Packard, Cisco and Intel will also give us the better picture of the overall economy.

Volatility index VIX closed down 2.66 points to 43.23, which is still well above the 200 day moving average. The relative strength indicates that there is still some support to the bear market rally argument and there is still some fear in the market.

As always trade wisely and use stop losses.

This is a lesson that many investors have been taught before, but so many investors have a difficult time following: do not chase after a bear market rally. In the past three days the Dow has gained over 550 points and has risen back above 7,000. Many on Wall Street are now asking whether this is a real sign of the bottom or if this is simply another suckers rally like several others have been in the last few months.

The main lesson that everyone should understand is that in a market that has an economic backdrop like we have right now there simply is no reason whatsoever to chase stocks higher in the hopes that this is the beginning of a huge move.  The simple fact of the matter is even in a brutal bear market there are going to be some violent swings higher because no market is going to go in a straight line in either direction. In fact, bear market rallies are typically much quicker, but also more short-lived than bull market rallies.

With an economy that is bleeding jobs and consumers losing trust in the overall system there is no reason to believe this is the start of a strong bull market. I am not saying that the bear market isn’t getting close to over, for that is much harder to determine, but rather I am simply stating that any bull market that would come in the future will be very slow to develop because of the slow economic recovery.

Don’t feel the need to chase your favorite stocks higher during these bear market rallies. The stocks will have big up days and big down days, and it is up to you to make sure you buy them at the right time.