When I signed off last night, I noted the carnage but left little in the way of a game plan. I put some thought into the situation last night and this morning. One idea that hit me was related to a comment that Mike made on Tuesday related to the Relative Strength Index (RSI). With last yesterday's selloff, the Dow Jones Industrial Average (DJIA) pushed toward an extreme oversold condition. That situation is being exacerbated here as the DJIA drops nearly 700 points this morning. This spurred me to run a scan for the most oversold stocks, based on last night's closing figures.

Some of the companies included in this scan include: Netflix (NFLX), Focus Media Holding Limited (FMCN), MBIA Inc (MBI), China Telecom Corp (CHA), Intel Corp. (INTC), Research in Motion (RIMM), Broadcom (BRCM), Dell (DELL), Texas Instruments Incorporated (TXN), Motorola (MOT), SunPower Corporation (SPWRA), NVIDIA Corp. (NVDA), First Solar, Inc. (FSLR), Chesapeake Energy (CHK), Exxon Mobil (XOM), Wal-Mart Stores (WMT), Microsoft (MSFT), General Electric (GE), Procter & Gamble (PG), IBM (IBM), Cisco Systems (CSCO), Cerner Corp. (CERN), Reliant Resources (RRI), Alliant Techsystems (ATK).

I limited the scan by market cap and analysts ratings as I wanted to find larger stocks that were more well-known. The tables also show short interest to float. High levels of short interest are bolded in black. Low percent of buys are bolded in green and high percent of buys are bolded in red.

The sheer volume of oversold stocks prevents me from posting the entire list. Even after adding my basic liquidity filters there were still more than 800 stocks on the list. Since I know that different people like to look for different characteristics, I took a "top 15" approach. I sorted the list by different criteria and then captured the top stocks from each criteria.

My bottom line thought is that we are hitting extremely oversold levels so there may be a good shot at a technical bounce. The caveats here are that any bounce may only be a short-term event and, if recent history continues, would likely be volatile. There is also risk that the old the warning for RSI holds true - oversold can always become more oversold. I believe the way to deal with this risk is to keep tight stops. That does increase the chance of getting stopped out, especially with the current high levels of volatility, but it does give you a chance to keep swinging. Clearly, this is not a strategy for everyone. My focus would be on the stocks that aren't showing much in the way of optimism.