Home improvement giant Home Depot  (HD - Get Report) and department store owner Kohl's  (KSS - Get Report) report quarterly results before the opening bell on Tuesday, May 21, in difficult environments for retailers. My call is to buy Home Depot and Kohl's on weakness to $188.96 and $61.11, respectively. The $188.96 level in Home Depot is its 200-day simple moving average. The $61.11 level is this month's value level for Kohl's.

Home Depot is in correction territory with a negative weekly chart and Kohl's is in bear market territory with a negative weekly chart.

Home Depot is a component of the Dow Jones Industrial Average and at Monday's open at $191.13 is above its 200-day simple moving average at $188.96. Despite being in a correction down 10.6% from its all-time intraday high of $215.43 set on Sept. 12, the stock is up 12.1% year to date and in bull market territory 21.8% above its Dec. 24 low of $158.09.

Kohl's offers brand-named apparel, shoes, accessories and home and beauty products at affordable prices. The stock opened Monday at $63.48, well below its 200-day simple moving average at $70.87, and is in a bear market 23.6% below its all-time intraday high of $83.28 set on Nov. 12. Kohl's is down 4.1% year to date and is 8.4% above its Dec. 24 price of $58.66.

Both retailers report earnings before the opening bell on Tuesday, May 21. Analysts expect Home Depot to earn $2.18 per share; it has a 26 consecutive-quarter winning streak on the line in terms of beating earnings-per-share estimates. It also has an elevated P/E ratio of 19.45 and a dividend yield of 2.83%, according to Macrotrends.

Analysts expect Kohl's to earn 67 cents per share and its winning streak is only five consecutive quarters. The stock is fundamentally cheaper than Home Depot with a P/E ratio of 11.35 and a dividend yield of 4.30%.

Even though these retailers serve two different segments, they both face higher prices due to the trade war with China. Look at the coverage by TheStreet.com as these retailers must navigate increased tariffs. Both are holdings in Jim Cramer's Action Alerts PLUS.

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The charts prefer Home Depot but Kohl's offers a favorable dividend.

The Daily Chart for Home Depot

Courtesy of Refinitiv XENITH

Home Depot is trading between its 200-day simple moving average at $188.96 and its 50-day simple moving average at $195.60. The stock declined 26.6% from an all-time intraday high of $215.43 set on Sept. 12 to its Dec. 24 low of $158.09. The Dec. 31 close of $171.82 was an important input to my proprietary analytics. The stock is below its semiannual and annual risky levels at $203.21 and $207.32, respectively, which was a sell zone between April 12 and April 26. The March 29 close of $191.89 was an input to my analytics and its quarterly risky level is above the chart at $218.19. The April 30 close at $203.75 was also an input and my monthly value level is at $177.70.

The Weekly Chart for Home Depot

Courtesy of Refinitiv XENITH

The weekly chart for Home Depot is negative with the stock below its five-week modified moving average of $195.30. The stock is above its 200-week simple moving average or "reversion to the mean" at $157.37. The 12x3x3 weekly slow stochastic reading is projected to fall to 65.00 this week down from 73.64 on May 17.

Trading Strategy: Buy weakness to the 200-day SMA at $188.96 and to the monthly value level at $177.70, and reduce holdings on strength to my semiannual, annual and quarterly risky levels at $203.21, $207.32 and $218.19, respectively.

The Daily Chart for Kohl's

Courtesy of Refinitiv XENITH

The daily chart for Kohl's shows the stock below a "death cross" that formed on Dec. 24 when the 50-day simple moving average fell below the 200-day simple moving average, indicating that lower prices would follow. The trading strategy when this occurs is to sell strength to the 200-day SMA, and the chart clearly shows several opportunities to sell at $70.00 and above. The close of $66.34 on Dec. 31 was the major input to my proprietary analytics; semiannual and annual value levels remain at $55.45 and $49.19, respectively. The close of $68.77 on March 29 was an input to my analytics and its quarterly risky level is at the top of the chart at $83.61. The April 30 close of $71.10 was also an input and the value level for May is $61.11.

The Weekly Chart for Kohl's

Courtesy of Refinitiv XENITH

The weekly chart for Kohl's is negative with the stock below its five-week modified moving average at $66.99. The stock is above its 200-week simple moving average or "reversion to the mean" now at $53.04. The 12x3x3 weekly slow stochastic reading is projected to fall to 35.87 this week down from 48.15 on May 17.

Trading Strategy: Buying weakness to its monthly and annual value levels at $61.11 and $55.45, respectively, and reduce holdings on strength to the 200-day simple moving average of $70.87.

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.