I have an outstanding 401k loan for 33k at 5.5%. I wanted to pay it off so not to lose out on the investment opportunity. HOWEVER, the market is crashing and my last quarter 2018 401k statement actually shows thousands of dollars lost. So now I feel like I might be putting money in to be lost in this current economy. SHould I pay it back and move the money to a conservative 401k investment for now? Does that make sense? Important detail: I am considering taking home equity loan (8-9.5% interest rate) to pay off the 401k loan. I am in my early 40s so it's not like I am retiring soon....
Following financial expert Dave Ramsey's Advice, pay back the loan immediately. When you leave your job (whether voluntarily or involuntarily), the amount will be due within 60 days or it will be taxed at your tax rate and penalized an additional 10%. https://www.daveramsey.com/blog/raiding-your-401-k-could-cost-you
As far as the market goes, when it goes down in value, in effect it's like the investments are on sale. Since your a long way from retiring anyway, it won't serve you to put them in "conservative" investments. Bonds are typically considered conservative, but in a rising interest rate market, bond values go down (they are inversely proportional). https://www.daveramsey.com/blog/bad-boy-bonds
If you do use a home equity loan to pay it off, realize you essentially did nothing toward reducing your debt. You are not ahead in any way. All this does is protect you from the taxes and penalties.
A 401k loan isn't ideal, and you should certainly endeavor to pay it off quickly. However, borrowing (especially at ~9% interest) to do so is not a good idea.
The 401k loan interest is paid back to your 401k, not to a bank. If you can afford payments on a 9% home equity loan, you can also afford to pay back your 401k loan more aggressively than you currently are, and that's what you should do. Yes, there's a chance that the market could perform well enough where you'd come out ahead taking on debt to repay the 401k loan now, but there's no guarantee, what is guaranteed if you get a home-equity loan is that you will be paying 9% on that debt.
If you lost/changed jobs, then a home equity loan would make sense to make sure the 401k loan was repaid within the 60-day window to avoid tax and penalty, but otherwise it makes the most sense to simply be more aggressive in repaying the 401k loan rather than paying interest to a bank.
The remainder of your question is more about timing the market, which the vast majority of people are unable to do successfully.