From the March bottom, stocks have rallied almost 50%. That's a nice move. It's a bull market unto itself, in about five months.

Does it have further to go?

My trader's heart tells me it does, because watching stocks move tick by tick every day, it just doesn't feel to me like they really want to go down. Watching the tape go by, you can sense the momentum -- the exact reverse of what it felt like most of last year, when stocks just didn't want to go up.

But my brain is telling me that the upside is limited, at least for a while.

For one thing, history doesn't give us very many 50% moves in just five months. In fact, in anything that you'd want to call modern history it's happened only twice before, both times coming out of the worst of the Great Depression in the early 1930s.

Let's get some context here. At the bottom in June 1932, stocks had fallen 85% from their 1929 highs. They rallied about 50% within just a few months -- the same as stocks have rallied recently -- right off the lows. But even after the move up, stocks were still off 78% from the highs.

After that, stocks churned around for several months. Then in mid-1933, an even bigger rally kicked in. At its peak, stocks rallied another 90%. Whew! If that happened now, it would take stocks to all-time highs, way higher than their 2007 peaks. But in the Depression, stocks had fallen so much to begin with, that even after that huge move they were still 61% off their 1929 highs.

At the very worst of the bear market we just lived through, at the very bottom in early March, stocks had fallen 58% from the 2007 top. Do you see where I'm going with this? The two huge bull moves in the Depression -- the only ones in history as large as the one we've just experienced -- happened from levels so much lower that, even after those moves were completed, stocks were still down more than they were at the very worst moments last year.

In other words, stocks have huge rallies when they have been beaten down. They can have a second huge rally when they have been really beaten down. I don't see how we can have another move like the one we've just experienced, because as bad as it was in March, having stocks down 58% just isn't anything like having stocks down 85%.

OK, I suppose all I'm really saying that it makes no sense to expect another 50% rally on top of the 50% rally we've already had. Such a hope may seem so wildly optimistic that it isn't even worth my arguing against it. But as I go around the country talking to institutional clients, you'd be surprised how bullish they suddenly are.

Maybe no one is expecting another 50% in just five months. But they do have high expectations. My point is that the rally we've already had was incredibly marvelous and improbable -- the fact that we had it doesn't mean we're going to have a lot more upside, it means that the upside is limited because of how much upside we've already had.

The narrative behind the bullishness goes something like this. We were facing a global banking crisis of historical proportions that threatened to shut down the financial infrastructure of the whole world. At its worst, stocks were pricing for that possibility. Now that risk has been all but erased, so stocks have repriced -- higher -- because they don't have that to worry about. OK, I'll accept that. Absolutely true. But 50% in five months is already a lot of repricing.

But then the narrative goes even further. The story goes that stocks, always a forward-looking indicator of the economy, are forecasting an end to the recession. I agree with that, too. But then the most bullish investors say that because the recession is over, stocks should move higher.

There I cannot go. What they're really saying is that stocks should move higher when the same recovery that stocks themselves predicted comes true. But if stocks already predicted a strong economy by moving up, then why should they move up again when the economy is strong? They are saying, in essence, that a move up in stocks predicts a move up in stocks. That makes no sense.

And then there's the technical argument. I hear over and over that there are a lot of investors who regret missing the bottom in March. The saying always goes that "there's tons of cash on the sidelines." And a lot of people seem to think they have very specific information about this, saying things like "the hedge funds are all still short."

Maybe that's true, and maybe it isn't. But I know that when investors start saying you should buy stocks simply because other people are going to buy stocks, they've run out of rational arguments and have started to resort to pure wishful thinking.

Don't get me wrong. I'm not bearish here. I think stocks need a good correction, and I think they'll get one. And then I think they'll move somewhat higher. But I absolutely do not think that we have anything like an "all clear" signal, and that we can no expect stocks to surge back to the former highs and beyond, as though the credit crisis and the recession never happened.

They did happen. Financial channels are damaged, and will stay damaged for years. Government has taken on trillions in debt to deal with the crisis, which will be an overhang threatening the world economy -- with inflation and higher tax rates -- for years.

And lest I miss an opportunity to get on my political soap box, another major problem is that the Obama administration and the Democratic Congress are going to keep trying to put more and more of the economy -- and your paycheck -- in the hands of government. That's not good for growth, and it's even worse for financial assets.

Let's not get greedy here, and try to run before we can even walk. The world just came through a near-death experience. It took intense and expensive treatment to save us. We survived, but we'll be living with the costs and the side effects of that treatment for a long while.

Be bullish. But don t be foolish.