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Net Net: Promoting innovation and managing change

This trend is an 'unambiguous buy' signal: BofA

Bears were beaten badly last week: Cashin

The stock market turbulence of the past three months has sent major averages tumbling and investor money to the mattresses.

Market pros have gotten so nervous that portfolio cash allocations have hit levels not seen since November 2001, according to Bank of America Merrill Lynch's fund manager survey for February.

Investors also have gotten more pessimistic about what lies ahead, putting growth and profit expectations at their lowest levels since July 2012.

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Probabilities for another Fed rate hike have diminished considerably, with the outlook now for no more than two moves in the next 12 months. Allocations to equities in general have diminished considerably, with investors piling into trades that benefit from a stronger U.S. dollar.

All the pessimism, however, contains a silver lining. BofAML analysts see the dash to cash and generally dismal expectations as an "unambiguous 'buy' signal."

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"Investors want capital preservation," BofAML strategists said in the report released Tuesday.

However, the level of cash allocation indicates that a market turn could be at hand.

According to the firm's model, a "buy" signal is triggered when cash levels top 4.5 percent, while a "sell" signal happens when the allocation falls below 3.5 percent. The current level is 5.6 percent, which, in a contrarian sense, indicates that investor fears have gotten overdone. Money markets took in $24.3 billion in new investor cash just last week alone and $31.3 billion year to date, representing just shy of 1 percent of total assets.

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The low investor sentiment comes with the down nearly 8 percent year to date and about 12 percent from its 12-month peak. The market has been rattled by a number of factors, predominantly declining oil profits and recession fears in the U.S. Worries over a Fed policy mistake also are on investors' minds, with the market on a straight path lower since the U.S. central bank in December hiked its interest rate target for the first time in more than nine years.

BofAML's strategy team on Friday lowered its full-year price target for the S&P 500, cutting from 2,200 to 2,000. That represents more than 6 percent upside from the current level, though it warned that considerable negative risks remain.

Fund managers have cut net long positions to 5 percent, down from 21 percent in December. Allocations to stocks have fallen on a global level as well, though not as much in Europe as in the U.S.

Investors are pessimistic about the global economy as well, with growth expectations for China at their lowest levels since 2008.