Morgan Stanley's European research team issued a call to invest in stocks in its latest strategy piece, as quantitative models measuring valuation, risk, fundamentals and capitulation are now all flashing "buy" signals, Ronan Carr from Morgan Stanley told CNBC.
"This signal reinforces our view that this is not the time to be short," Carr said.
There are risks in the short term, but "the downside beyond the lows of a week or two ago is fairly limited," he said, adding that the quantitative models, work 80 to 90 percent of the time.
The last time all four models flashed "buy" signals was in September 2002. They all flashed "sell" in June 2007, close to the peak of the European market.
"This does give us confidence that from a strategic point of view we're at least close to a major turning point," Carr said.
Investors should still step into the defensive areas, of which he prefers telecommunications because it looks quite cheap and the balance sheet concerns were exaggerated, or, outside the defensive zone, he recommends the oil sector.