This is the most difficult and common question.
The answer is: I don't know. The 401k is a death trap, and one of the most horrible tools created by our Federal government. While people cheered it during the 90's stock bubble, many today have been left devastated.
The choice to pull your money out of the 401k and take the tax penalties early is a very personal decision and should be made only after serious consideration.
If you do decide to keep your money within your 401k and invest in stocks, I would ONLY invest in foreign stock and cash equivalent funds. Keep them as diversified as possible.
At today's valuations I would favor cash over the American stock market, but that is VERY short term as cash is also in great danger as we move forward.