1. Switch to a more stable money market or bond fund yes; sell maybe no. As obviously even in other investment you'll hear ppl which pumps in more money when it falls. It's to recoup even more in the event that it bounced back.

after switching to money market/bond fund, any strategy when to go back into the "market"?

3. Switch or sell funds performing well?! Sell annually? You do realise the unit trust is usually not for "short term" i.e. usually during the first 2 years you might get nothing back because of the service charge imposed when you buy 5%-6.5%.
Also, buy non performing fund? For what? Hoped that after all these years they do not perform so suddenly they would shoot up?! I would definitely go with the "bull" instead of the "bear".

what i meant here is you have a portfolio of funds and each of these fund have a certain asset allocation. so when fund A is performing well, the % of the value of fund A in the portfolio will surely outgrows the original %. therefore, rebalancing means switching/selling fund A to another fund in your portfolio that has lesser % of value in your portfolio. in this way, it will bring back the % of asset allocation to the original state.

perhaps, another way to do this if you have extra cash, is to buy more of lesser performing fund in your portfolio and less $ for the better performing fund....