As discussed here, I have resurrected a scan that focuses on companies that are heavily shorted. The purpose is to find stocks that could be in the midst of a potential short covering rally. More details about the methodology are listed below and more information on short interest is here.

Companies included in today's scan are: Clearwire Corporation (CLWR), InterMune Inc (ITMN), Osiris Therapeutics, Inc. (OSIR), YRC Worldwide Inc (YRCW), AutoNation (AN).

Today's list offers evidence of how widespread yesterday's selling really was. I start my scan with a list of over 3000 stocks. Whittling that down to the more liquid, heavily-shorted names yields over 500. However, when we add the criteria that says the shares need to show a gain yesterday, the list drops to just 5 stocks. This, of course, follows the pattern I have been discussing and reinforces the argument that heavily-shorted stocks aren't necessarily a safe haven during selloffs.

Methodology - the query scans my database of companies which has some basic filters to eliminate penny stocks and those that don't trade frequently. The table above lists stocks that have at least 10 percent of their float sold short and then shows the top gainers from the previous trading day. This can be a useful tool for finding situations where stocks with heavy short interest have begun to move.