The market woke up this morning to news of violence in the streets of Greece, as protestors objected to that nation’s austerity measures. The fiscally beleaguered country has become of a symbol of what happens when you combine too much government spending with an economic downturn. Fears of contagion from a Greek default have intensified recently, as eurozone officials failed to make progress on discussions about Greek aid. Well, Wall Street certainly doesn’t like riots, so it’s no surprise that stocks reacted with a sharp sell-off.

The selling today wiped out a solid up day for stocks on Tuesday, and that’s got many investors feeling the fear. One measure of that fear is the Chicago Board Options Exchange volatility index, or VIX. That measure jumped to a three-month high today, illustrating just how much worry there is over the future of equities.

One thing to note here is that though the VIX has climbed during the past six-week sell-off, the index hasn’t surged to levels normally seen when investors are extremely worried. That could be changing, however, as today’s VIX spike suggests.

The question now for investors is this -- is it time to get defensive and move to cash?

I am of the opinion that now is not the time to jump off the equity ship -- at least not yet. If we look at the chart below of the S&P 500 Index, we see that stocks have been mired in a sharp downturn since May. Still, we remain above the technically significant 200-day day moving average (red line).

I told you in last week’s Alert that I thought stocks are likely to creep a bit lower, but that they likely would find support at the 200-day mark. Nothing since then has changed that view. In fact, Tuesday’s bounce in the market has me even more convinced that the selling has just about run out of steam.

Of course, I could be proven wrong by the market and, if so, it indeed will be time to get defensive. As I wrote last Wednesday, your next move as an investor will be dependent on your current posture. If you are long this market, this is not the time to panic and start liquidating positions. If you have big profits in individual positions, then it’s fine to lock in those gains. Just don’t give in to the fear and liquidate all of your holdings en masse.

As of this writing, subscribers to my Successful Investing advisory service are holding both equities and cash. We have a diverse blend of positions designed to give us exposure to a variety of market segments, and that diversity has served us well during the latest sell-off. If you’d like to find out more, then I invite you to check out Successful Investing today.