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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 TradingAnalysis.com. "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."

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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.

Brian Sullivan

Brian Sullivan is co-anchor of CNBC's "Power Lunch" (M-F,1PM-3PM ET), one of the network's longest running programs, as well as the host of the daily investing program "Trading Nation." He is also a frequent guest on MSNBC's "Morning Joe" and other NBC properties.

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