The Nasdaq Composite Index could dive to around 1,108 if critical levels are breeched in the coming week, Richard Morrish, head of research from MIG Investments, told CNBC.

This "week is absolutely vital for this market because if it breaks … onto the downside, the acceleration on the bear tack could be very, very quick and take us down to around the 1,108 level, which marked the 2002 lows," Morrish said.

If the tech-heavy index falls below the 1,522 level this week then it would be a clear signal for the sharp down move, Morrish said.

Investors are too focused on the level of volatility and think the Nasdaq is oversold and will bounce back, Morrish said, adding "it looks very much like everybody's got to the long side of this."

(Watch Richard Morrish's interview above for his bearish views on the pound).

Instead investors should look to the state of the "fractured" credit market, which is in a far worse state that it was during the market turmoil in the early 2000s, Morrish said.

"Equities are not pricing in anywhere near the amount of damage that can be done," he said.

A short-term rally is possible in the Nasdaq, [.NDX 1311.72 --- UNCH (0) ] but it will be capped at around 1,952 or 2,208, Morrish said.

Any positive move is "purely correctional within a long-term bear market," he added.