Definitely contribute to your ROTH. Its better to have the money tax sheltered, and you can still stay in “cash” if you wish.

In addition, have you considered selling cash-secured put options at the price your willing to buy the index at (Dow 7000 in your case)? You will receive relatively large premiums while the volatility is high. This still allows you to keep all your funds in a money market (plus the premium from selling the option). I’d recommend options 1-3 months out. The risk is that the index blows through your “7000” strike price (since you will be assigned at that price), this also makes the option much more valuable, thus closing out the position will cost considerably more then the index level at the time (closing out the position before expiration could result a net a loss even if the underlying is above the strike). If this interests you, familiarize yourself with options thoroughly.