Dollar General  (DG - Get Report) and Dollar Tree  (DLTR - Get Report) report quarterly results before the open on Thurs., May 30. Both must navigate current and future tariffs on goods from China. My call is to buy both on weakness to their 200-day simple moving averages at $113.50 and $93.34, respectively.

Dollar General has been the better performer so far in 2019, but both are vulnerable, given negative weekly charts.

Dollar General has 15,000 country variety stores across continental USA. Dollar Tree has 7,001 discount variety stores with many in suburban areas. Both dollar stores report earnings in less than 24 hours. Dollar General is expected to earn $1.39 per share, Dollar Tree should be at $1.13 per share. Oppenheimer likes Dollar General over Dollar Tree, as it's in a better position to manage increased tariffs. Dollar Tree has a larger exposure to China and continues to feel the stress of buying Family Dollar.

Fundamentally, Dollar General has a P/E ratio of 20.40 and a dividend yield of 1.05%, according to Macrotrends. Dollar Tree has a P/E ratio of 18.06, but does not offer a dividend. Some equity money managers will avoid Dollar Tree because it does not offer a dividend.

The Daily Chart for Dollar General

Courtesy of Refinitiv XENITH

Dollar General opened Wednesday at $119.31 and tested its annual pivot at $118.52, which has been a magnet since Feb. 12. Its 2019 high of $128.64 was set on April 25 and is 5.9% below the high at the open on May 29. The stock is between the annual pivot at $118.52 and its monthly, weekly and quarterly risky levels at $124.52, $126.13 and $129.00, respectively. The year began with a buying opportunity at its semiannual value level at $106.53. The stock is between its 200-day simple moving average at $113.50 and its 50-day SMA at $121.38. Note the price gap lower when the retailer missed earnings estimates on March 14.

The Weekly Chart for Dollar General

Courtesy of Refinitiv XENITH

The weekly chart for Dollar General is negative with the stock below its five-week modified moving average of $120.97. The stock is well above its 200-week simple moving average or "reversion to the mean" at $87.77. The 12x3x3 weekly slow stochastic reading is projected to slip to 73.88 this week down from 78.74 on May 24.

Trading Strategist: Buy weakness to the 200-day simple moving average at $113.50 then on weakness to its semiannual value level at $106.53. Reduce holdings on strength to the monthly, weekly and quarterly risky levels at $124.52, $126.13 and $129.00, respectively.

The Daily Chart for Dollar Tree

Courtesy of Refinitiv XENITH

Dollar Tree opened Wednesday at $96.26, moving further below its semiannual pivot at $100.84. The daily chart for Dollar Tree clearly shows solid strength in 2019, until it turned on a dime after the stock peaked at $111.61 on April 30. The stock is 13.8% below this high. DLTR is well below its quarterly, weekly and semiannual pivots at $105.07, $103.65 and $100.84, respectively. The 200-day simple moving average is the buy level at $93.34. Note the positive reaction to earnings on March 6, which began the strength to the 2019 high.

The Weekly Chart for Dollar Tree

Courtesy of Refinitiv XENITH

The weekly chart for Dollar Tree is negative with the stock below its five-week modified moving average of $101.56. The stock is above its 200-week simple moving average or "reversion to the mean" at $85.88. The 12x3x3 weekly slow stochastic reading is projected to end this week slipping to 48.05 down from 62.73 on May 24.

Trading Strategy: Buy weakness to the 200-day simple moving average at $93.34 and reduce holdings on strength to semiannual, weekly, monthly, quarterly and annual risky levels at $100.84, $103.65, $105.07, $111.42 and $116.69, respectively.

How to use my value levels and risky levels:

Value levels and risky levels are based upon the last nine weekly, monthly, quarterly, semiannual and annual closes. The first set of levels was based upon the closes on Dec. 31. The original semiannual and annual levels remain in play. The weekly level changes each week; the monthly level was changed at the end of January, February, March and April. The quarterly level was changed at the end of March. My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility, investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.