How to Trade 5 Troubled Discount Retailers on Main Street, USA

Discount retailers Dollar General (DG) , Dollar Tree (DLTR) , Kohl's (KSS) , Ross Stores (ROST) and TJX (TJX) report quarterly earnings starting with Kohl's before the opening bell on Thursday. The others report between Nov. 15 and Dec. 1. All five are in recovery mode as shown on their weekly charts.

Dollar General is mired in bear market territory 26.2% below its all-time intraday high of $96.88 set on July 27. The stock gapped significantly lower on Aug. 25 on weaker-than-expected earnings. The stock set its 2016 low of $66.50 on Oct. 5, and the rebound since then has been 7.5%. The rural-based discount retailer reports earnings on Dec. 1 and analysts expect the company to earn 93 cents a share.

Dollar Tree is mired in bear market territory 23.9% below its all-time intraday high of $99.93 set on Aug. 11. The stock gapped significantly lower on Aug. 25 on weaker-than-expected earnings. The stock set its 2016 low of $72.55 on Nov. 9, and the rebound on that day was 4.8%. The rural-based and suburban discount retailer reports earnings on Nov. 22 and analysts expect the company to earn 78 cents a share.

Kohl's is in correction territory 12.2% below its Jan. 7 high of $52.06. The stock traded as low as $33.87 on May 12 and is in bull market territory 34.9% above this low. This discount retailer reported earnings before the opening bell on Nov. 10 and analysts expected this company to earn 66 cents a share.

Ross Stores is in bull market territory 24.7% above its Jan. 20 low of $50.42. Analysts expect this discount retailer to report to earn 56 cents a share after the closing bell on Nov. 17. The stock is 5.2% below its Aug. 19 high of $66.28.

TJX is in correction territory 11.2% below its Aug. 15 high of $83.64. TJX reports their earnings before the opening bell on Nov. 15 and analysts expect this discount retailer earn 87 cents a share.

TJX is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells TJX? Learn more now.

Here's the scorecard for the five discount retailers.

 

Here's the weekly chart for Dollar General.

Courtesy of MetaStock Xenith

The weekly chart for Dollar General will be negative but oversold if the stock ends the week below its key weekly moving average of $71.40, but will be neutral on a close above this key level. The stock has been above its 200-week simple moving average of $66.30 in recent weeks. The weekly momentum reading at 8.96 is well below the oversold threshold of 20.00.

Investors looking to buy Dollar General should consider doing so on weakness to $66.30, which is the 200-week simple moving average. Investors looking to reduce holdings should consider selling strength to $81.13, which is a key level on technical charts until the end of 2016.

Here's the weekly chart for Dollar Tree.

Courtesy of MetaStock Xenith

The weekly chart for Dollar Tree will be negative but oversold if the stock ends the week below its key weekly moving average of $77.94, but will be neutral on a close above this key level. The stock is well above its 200-week simple moving average of $65.98. The weekly momentum reading at 6.98 is well below the oversold threshold of 20.00.

Investors looking to buy Dollar Tree should consider doing so on weakness to $72.45, which is a key level on technical charts until the end of next week. Investors looking to reduce holdings should consider selling strength to $85.00, which is a key level on technical charts until the end of 2016.

Here's the weekly chart for Kohl's.

Courtesy of MetaStock Xenith

The weekly chart for Kohl's ended last week negative but will be upgraded to neutral given a close on Friday above its key weekly moving average of $44.10. The stock is well below its 200-week simple moving average of $52.68. The weekly momentum reading is projected to decline to 68.85 down from 72.58 on Nov. 4.

Investors looking to buy Kohl's should consider doing so on weakness to $42.94 and $38.24, which are key level on technical charts until the end of 2016 and until the end of November. Investors looking to reduce holdings should consider selling strength to $54.10, which is a key level on technical charts until the end of 2016.

Here's the weekly chart for Ross Stores.

Courtesy of MetaStock Xenith

The weekly chart for Ross Stores ended last week negative but will be upgraded to neutral given a close on Friday above its key weekly moving average of $62.75. The stock is well above its 200-week simple moving average of $44.44. The weekly momentum reading is projected to decline to 46.92 down from 55.82 on Nov. 4.

Investors looking to buy Ross Stores should consider doing so on weakness to $55.15, which is a key level on technical charts until the end of 2016. Investors looking to reduce holdings should consider selling strength to $64.62, which is a key level on technical charts until the end of November. The $62.80 level should be a magnet until the end of 2016.

Here's the weekly chart for TJX.

Courtesy of MetaStock Xenith

The weekly chart for TJX is week negative but oversold with the stock below its key weekly moving average of $74.26. The stock is well above its 200-week simple moving average of $63.82. The weekly momentum reading is at 12.17, well below the oversold threshold of 20.00.

Investors looking to buy TJX should consider doing so on weakness to $63.82, which is the 200-week simple moving average. An annual level of $74.44 should be a magnet until the end of 2016. Investors looking to reduce holdings should consider selling strength to $79.00, which is a key level on technical charts until the end of November.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

More from Stocks

Dow Trades Lower as Apple's Slump Offsets Gains in General Electric

Dow Trades Lower as Apple's Slump Offsets Gains in General Electric

Video: When Analyzing General Electric, Take Stock of Your Cost Basis

Video: When Analyzing General Electric, Take Stock of Your Cost Basis

Live at 11 a.m. ET: Our Columnists Talk General Electric

Live at 11 a.m. ET: Our Columnists Talk General Electric

Cigarette Stocks Have Been Smoked This Week -- Here's a Top Trade

Cigarette Stocks Have Been Smoked This Week -- Here's a Top Trade

What Do Trade Wars Mean for High Yield Bond Investors?

What Do Trade Wars Mean for High Yield Bond Investors?