Bank of America Merrill Lynch: This trend is an 'unambiguous buy' signal

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

"Investors want capital preservation," BofAML strategists said а report. 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.

The low investor sentiment comes with the S&P 500 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 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.