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Bank of America Merrill Lynch’s “Bull & Bear” gauge of market sentiment has fallen to 1.8, a level the U.S. bank’s strategists describe as “extreme bear” territory that has triggered a “buy” signal for equities.

This is the first time the “buy” signal for risk assets has been triggered since June, 2016, when the Brexit vote sent global markets spiralling lower, the strategists said on Friday, adding it was “time to buy.”

The note came as markets rallied strongly after blowout employment figures from the United States lifted some investors’ concerns about slowing economic growth.

BAML said global equities have tended to rise after their “buy” signal was triggered. Their median performance the following three months – in the 15 occurrences since 2000 – has been 6.1 per cent.

Investors should buy the S&P 500, Chinese stocks, German stocks, U.S. small-caps, semiconductor and energy shares, U.S. and European high-yield bonds and emerging currencies, all of which are “very oversold,” the strategists said.

They saw the S&P 500 rallying to 2,650 points.

Global markets have had a torrid December and difficult start to 2019 as trading was marred by a slowing global economy, and multiplying signs of the impact of a U.S.-China trade war, the most recent of which was a revenue warning from Apple Inc.

In recommended sells, BAML pointed to U.S. Treasuries, Japan’s yen and health care and utility stocks considered “defensive.”

BAML strategists said global equities have lost US$19.9 trillion in market value since their peak in January, 2018, close to the United States’ nominal gross domestic product, which stood at US$20.66 trillion a year in the third quarter of 2018.

Citing data from flows tracker EPFR, BAML said the past six weeks have seen record outflows from equities (US$84 billion) and investment-grade bonds ($34 billion), while government bonds have seen inflows of US$24 billion.

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