These recently downgraded names are displaying both quantitative and technical deterioration.

Stocks quotes in this article: BIG, RUTH, SWX

Each week we identify names that look bearish and may present interesting investing opportunities on the short side.

Using technical analysis of the charts of those stocks, and, when appropriate, recent actions and grades from TheStreet’s Quant Ratings, we zero in on three names.

While we will not be weighing in with fundamental analysis, we hope this piece will give investors interested in stocks on the way down a good starting point to do further homework on the names.

Big Lots Needs Lots of Help

Big Lots Inc. (BIG) recently was downgraded to Sell with a D+ rating by TheStreet’s Quant Ratings.

Wow, this discount retailer really has been pounded for weeks. There is extreme volume to the downside here with a moving average convergence divergence (MACD) sell signal. The Relative Strength Index (RSI) is bending downward, too, and with money flow coming out of Big Lots there is more downside potential despite the stock already putting in lower prices.

Look for a move to single digits, but just in case put in a stop at $17.

Ruth’s Hospitality Looks Unappetizing

Ruth’s Hospitality Group Inc. (RUTH) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings

This prominent steakhouse operator is in need of rescuing. Ruth’s shows massive distribution since the peak in November, with a channel of lower highs and lower lows. Money flow is bearish as can be, and while the RSI is oversold that is no reason to buy.

Could we see a bounce? Sure, but frankly, any bounce is going to be weak. The 20-day moving average is at $15.55, more than 7% away from current prices. Also, MACD is on a sell signal. If short, target the $9 area, put in a stop at $18.

Southwest Gas Struggles

Southwest Gas Holdings Inc. (SWX) recently was downgraded to Hold with a C+ rating by TheStreet’s Quant Ratings

This big natural gas distributor has been swooning of late. With a series of lower highs and lower lows there is a good chance Southwest Gas breaks the recent lows around $62.

Given the volatile nature of SWX we could see a larger selloff than normal. Money flow has been flushed out of the name, RSI is oversold and the cloud is red. MACD is also on a sell signal. This stock is in trouble. Hence, it’s a good short here; put in a stop at $70, target the $50 area.

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