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Retail’s Final Reckoning?

With bullish sentiment starting to wane, how will same-store sales figures released Thursday impact retail names as well as the broad market?

Retailers could post their 11th consecutive drop in monthly same-store sales this week as cool weather and a weak job market have shoppers picking through the clearance racks in July instead of buying full-priced back-to-school clothes.

July typically offers retailers a chance to bolster second-quarter profits by selling new autumn merchandise to fashion conscious students, but this year shoppers are showing a reluctance to buy anything at full price.

"This is the end of the quarter for most retailers," said Eric Beder, retail analyst at Brean Murray, Carret & Co. "The final reckoning is going to happen on Thursday." Beder is referring to gains in the sector and whether same-store sales will be "less bad" enough for most stocks to hold their ground.

In July, overall same-store sales for U.S. retailers are expected to fall 5 percent, according to data from Thomson Reuters. The figure excludes Wal-Mart , which stopped reporting monthly sales earlier this year.

Department stores and retail chains that sell clothes to teenagers and children are expected to post the worst sales declines in July with a 9 percent and 10.4 percent drop, respectively.

What’s the trade?

I think the numbers will be decent but considering how much these stocks have already run, I don’t see a lot more upside.

Gains in retail have been fueled by cost cutting and not increased sales, adds Guy Adami. I’d be careful.

I’ve got Target on my radar, adds Joe Terranova. They’re aggressively cutting the price of back-to-school items. That could attract a lot of shoppers.




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Trader disclosure: On Aug 5th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Terranova Owns (MSFT), (RIMM), (JPM), (MS), (ABT), (MCD), (AMZN); Terranova Works For (VRTS); Terranova Is Short (TM), (WFC), (WYNN), (F); Finerman Owns (RIG); Finerman's Firm Owns (MSFT), (NOK), (PBR), (RIG), (PDE), (TBT), (WMT), (TGT); Finerman's Firm Is Short (USO), (IJR), (IYR), (IWM), (MDY), (SPY); Finerman's Firm And Finerman Own (BAC) Preferred Shares; Finerman's Firm And Finerman Own (WFC) Preferred Shares; Finerman's Firm Is Short (WFC); Finermna's Firm Is Long (WFMI) Puts; Najarian Owns (AET); Najarian Owns (BAC) Call Spread; Najarian Owns (BX) Call Spread; Najarian Owns (BUCY) & (BUCY) Call Spread; Najarian Owns (FCX) & (FCX) Call Spread; Najarian Owns (INTC) Call Spread; Najarian Owns (JPM) & (JPM) Call Spread; Najarian Owns (MS) & Short (MS) Calls; Najarian Owns (MSFT) & Short (MSFT) Calls; Najarian Owns (PALM) Call Spread; Najarian Owns (V) & Short (V) Calls; Najarian OWns (YHOO) Call Spread ; Najarian Owns (SYNA) Calls; Najarian Owns (CSCO) Call Spread; Najarian Owns (SWNA) Calls; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU)