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When considering stocks it's always helpful to gauge what the rest of the market thinks. With this in mind we screened the technology sector for two bullish indicators.

First, we screened for tech stocks seeing the most significant increase in short covering. That is to say that the numbers of shares shorted have decreased significantly month-over-month.

Next we screened for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform into the future.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top four stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

Do you think institutions are correct in buying these tech stocks? Use this list as a starting point for your analysis.

1. ADTRAN Inc. (NASDAQ:ADTN): Designs, manufactures, markets, and services network access solutions that enable voice, data, video, and Internet communications across wireline and wireless networks worldwide. Market cap at $1.11B, most recent closing price at $17.74.

Net institutional purchases in the current quarter at 6.3M shares, which represents about 10.09% of the company's float of 62.43M shares.

Shares shorted have decreased from 12.09M to 10.48M over the last month, a decrease which represents about 2.58% of the company's float of 62.43M shares. Days to cover ratio at 6.14 days.

2. Emulex Corporation (NYSE:ELX): Provides network convergence solutions that connect servers, storage, and networks within the data center. Market cap at $566.59M, most recent closing price at $6.32.

Net institutional purchases in the current quarter at 4.6M shares, which represents about 5.65% of the company's float of 81.48M shares.

Shares shorted have decreased from 3.86M to 2.46M over the last month, a decrease which represents about 1.72% of the company's float of 81.48M shares. Days to cover ratio at 2.75 days.

3. First Solar, Inc. (NASDAQ:FSLR): Manufactures and sells solar modules using a thin-film semiconductor technology. Market cap at $2.05B, most recent closing price at $23.54.

Net institutional purchases in the current quarter at 11.5M shares, which represents about 19.62% of the company's float of 58.62M shares.

Shares shorted have decreased from 29.80M to 28.22M over the last month, a decrease which represents about 2.7% of the company's float of 58.62M shares. Days to cover ratio at 4.14 days.

4. Healthstream Inc. (NASDAQ:HSTM): Provides Internet-based learning and research solutions in the United States. Market cap at $615.12M, most recent closing price at $23.46.

Net institutional purchases in the current quarter at 1.5M shares, which represents about 7.63% of the company's float of 19.65M shares.

Shares shorted have decreased from 1.77M to 1.35M over the last month, a decrease which represents about 2.14% of the company's float of 19.65M shares. Days to cover ratio at 11.93 days.

Institutional data sourced from Fidelity, short data sourced from Yahoo! Finance, all other data sourced from Finviz.

Source: Institutions Are Buying These 4 Technology Stocks With Short Covering