NEW YORK ( TheStreet) -- The S&P 500 set a new all time high at 1,687.18 on May 22, but six of the nine discount retailers I have been tracking set their 2013 highs on or before May 22 on slowing consumer spending.Last week we had several data points that help diagnose the health of the U.S. consumer. On Tuesday, the Conference Board's reading on consumer confidence came in at a much stronger than expected 76.2, but still well below the neutral reading of 90 to 110. On Thursday, initial jobless claims were higher than expected at 354,000, above the recessionary 350,000 level, but the four-week moving average remained below 350,000. Also on Thursday the preliminary reading for Q1 Real GDP came at 2.4%, slightly below expectations. On Friday, personal income for April was reported as flat with a 0.2% decline in spending. This mix of data should favor the buy rated discount retailers, but it seems to me that the rebound in consumer spending from the depths of the recession has reached a plateau. The last time I profiled the nine discounters I am covering today was March 13, Discount Retailers Continue to Lag Despite Recovery. All have maintained buy ratings and eight of nine traded higher since then. The headliner this week, Dollar General ( DG), reports quarterly earnings pre-market on Tuesday and an EPS of 72 cents per share is expected. When I look at the weekly chart profiles for these stocks there are warning signs as six of nine have negative charts or could turn negative this week. The other three have overbought weekly charts. This could provide an overall stock market warning given the importance of consumer spending at these discount retailers.
Fundamentally, we begin June still under a ValuEngine valuation warning with 71.7% of all stocks overvalued, and with 34.2% overvalued by 20% or more. We show 15 of 16 sectors overvalued, 14 by double-digit percentages, with six overvalued by more than 20% including consumer staples by 20.6% and retail-wholesale by 26.2%.
Reading the TableOV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine. VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy. Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage. Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months. Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted. Risky Level: Price at which to enter a GTC limit order to sell on strength.
Dollar General ( DG) ($52.80 vs. $47.76 on March 13) set its 2013 high at $55.17 on May 28. The weekly chart profile is positive but overbought with the five-week MMA at $52.32. Semiannual value level is $50.94 with a semiannual risky level at $55.09.
Wal-Mart Stores ( WMT) ($74.84 vs. $73.60 on March 13) set a multi-year high at $79.96 on May 15. The weekly chart shifts to negative on a close this week below the five-week MMA at $76.74. My monthly value level is $72.47 with a quarterly risky level at $78.49. At the time of publication the author held no positions in any of the stocks mentioned. Follow @Suttmeier This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.