How To Trade Today's ISM Services

Today the ISM Services index is scheduled to be released at 10:00 a.m. for June, and economists are expecting the reading to come in below May's reading, but still indicate expansion. Economists expect a reading of 54.0, which is down slightly from May's reading of 54.6, but it still indicates service sector expansion, and with services the majority of the economy, this is a closely watched number, and is almost always a market mover. Should the services index come in better than expected, we could see companies Wal-Mart WMT, Target TGT and companies of that nature rally a little bit on a hotter than expected ISM services index. ACTION ITEMS:

Bullish:
Traders who believe that the ISM Services Index number will be better than expected might want to consider the following trades:

• Going long a name like Wal-Mart WMT could prove profitable, as it is the country's largest service sector employer.

• A name like Costco COST could also move higher should the ISM Services number come in better than expected.

• An ETF that could capture some upside is the Retail HOLDRs ETF RTH, which holds many prominent retail names.

Bearish:
Traders who believe that the ISM Services is likely to come in worse than expected may consider an alternate positions:

• If the ISM Services is weaker than expected, the U.S. dollar is likely to move higher, and traders can go long the U.S. Dollar ETF UUP.

• Traders can also add or initiate positions in ETFs that profit from a market decline, such as ProShares UltraShort S&P500 ETF SDS.A strong ISM Services is important to the overall economy, and if it is weak, then the market is likely to move down with it.

• Another ETF to consider is Direxion Daily Small Cap Bear 3X Shares TZA.

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