Morgan Stanley Chief U.S. Equity Strategist Mike Wilson has warned that selloff in U.S. equities isn't over yet, reports Bloomberg.

What Happened: Last month, Wilson had called the peak in S&P 500 after the massive rally, which led to a lopsided market. "We expect a growth scare to be followed by a rate scare over the next weeks/months that could finally give us the first tradable correction in the major U.S. equity indexes. It could begin imminently," he wrote in a note to clients.

Nasdaq 100 is down 13% from its Sept. 2 high, falling below its 50-day average and underperforming the S&P 500 for the first time in a year.

The historic rally has led to a positive sentiment bubble in the last few months led by tech, and the selloff hasn't cleared the bubble yet.

Nasdaq 100 is at the risk of falling to its 200-day average level of 9,258, implying a 12% drop from current levels, according to Wilson.

"This is what happens when stocks get so extended - corrections can be much bigger when remaining in an uptrend," wrote Wilson.

Why It's Important: The biggest tech ETF, PowerShares QQQ Trust (NASDAQ:QQQ), lost money at the fastest rate in two decades on Friday, and large speculators boosted the net bearish positions in Nasdaq futures to a 12-year high, according to Bloomberg.