Why Wal-Mart and Best Buy earnings mean so much for the market

The iPhone X is a major threat to brick-and-mortars this holiday season

Big-box retailers Wal-Mart and Best Buy are due to report quarterly earnings on Thursday, and one strategist is watching specifically for the companies' holiday sales forecasts.

After Target issued what investors considered a lackluster holiday forecast on Wednesday, the guidance for other large retailers will matter for the broader retail space, said Boris Schlossberg, managing director of foreign exchange strategy at BK Asset Management. Here's why:

• Shares of Target fell nearly 10 percent in Wednesday trading after it reported earnings, due in large part to what it believes could be a soft holiday season. If Wal-Mart and Best Buy reports reflect similarly dim forecasts, Schlossberg said, he would grow worried about what the fourth quarter holds.

• "Given the fact that so much of retail has now moved to online, it's almost a slam dunk to think that Amazon is going to be the primary beneficiary of whatever Christmas demand we're going to see this year. The big question is whether the brick-and-mortar stores are going to be able to stave off some of that customer demand and capture some of the additional dollars," he said Wednesday on CNBC's "Trading Nation."

• Schlossberg added that as far as brick-and-mortar retailers go, Apple could pose a threat to other retailers' sales given the recent iPhone X launch and its hefty price tag.

• "If demand for the [iPhone] X really is strong into the Christmas season, it may very well simply cut out spending for all other items," he said.

Analysts are expecting earnings per share of 78 cents for Best Buy and 97 cents for Wal-Mart, according to FactSet estimates.

Bottom line: Should Wal-Mart and Best Buy report dim holiday season forecasts on Thursday, this could spell a warning for the retail space, Schlossberg said.