Markets are selling off—here's what caught my eye: Trader

The financial sector suffered the most in Friday's market shock waves following the Brexit vote, and amid the carnage, one trader sees even more pain coming.

"[Yields] are plummeting, and that's dragging financials down," Todd Gordon told CNBC's "Trading Nation" on Friday. The TLT bond ETF, with trades inversely with yields, surged to levels not seen since 2015.

"I'm looking for technical support in the XLF [Financial ETF] between 21.74 and 21.22 on the downside," added the founder of "I'm looking for a lot more weakness here. ... I think a short trade in the XLF makes a lot of sense."

Gordon also noted that the large-cap S&P index is dangerously close to breaching a major level.

Looking at the S&P 500 ETF, the SPY, Gordon noted that the chart is on the verge of breaking support from its triple bottom. "If that breaks then the markets will continue to move lower and financials will lead," he said.

"Expect a breakdown in the market; bonds continue to press higher, look for the yen to be strong and the British pound to be weak," Gordon added. "That's how you handicap this market."


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

Read more