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Interested to know what the market thinks about a certain stock? One of the most telling indicators is shares shorted. Since shorting indicates a bearish outlook, stocks with higher short selling are being given a more bearish outlook by traders.

We ran a screen on the S&P 500 (NYSEARCA:SPY) for stocks seeing the most significant decreases in shares shorted month-over-month, indicating that short sellers are more bullish about these names than before.

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

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month.

(Click chart for more detail)

Do you agree with short sellers’ optimism for these names? Use this list as a starting point for your own analysis.

List sorted by decrease in shares shorted.

1. Masco Corporation (NYSE:MAS): Distributes, and installs home improvement and building products for home improvement and new home construction markets principally in North America and Europe. Market cap of $3.38B. Shares shorted have decreased from 16.62M to 12.03M month-over-month, a change representing 1.32% of the company's 347.07M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.19). The stock has lost 21.51% over the last year.

2. Kohl's Corp. (NYSE:KSS): Operates department stores in the United States. Market cap of $13.67B. Shares shorted have decreased from 14.22M to 11.17M month-over-month, a change representing 1.30% of the company's 235.38M share float. Might be undervalued at current levels, with a PEG ratio at 0.88, and P/FCF ratio at 14.06. The stock has lost 5.18% over the last year.

3. JDS Uniphase Corporation (NASDAQ:JDSU): Provides communications test and measurement solutions, and optical products for telecommunications service providers, cable operators, and network equipment manufacturers. Market cap of $2.40B. Shares shorted have decreased from 13.72M to 10.83M month-over-month, a change representing 1.26% of the company's 228.52M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.36). The stock has performed poorly over the last month, losing 14.53%.

4. Eastman Chemical Co. (NYSE:EMN): Engages in the manufacture and sale of chemicals, plastics, and fibers in the United States and internationally. Market cap of $5.48B. Shares shorted have decreased from 5.34M to 3.62M month-over-month, a change representing 1.26% of the company's 136.90M share float. The stock has had a couple of great days, gaining 5.4% over the last week.

5. Western Digital Corp. (NASDAQ:WDC): Engages in the design, development, manufacture, and sale of hard drives worldwide. Market cap of $7.41B. Shares shorted have decreased from 5.95M to 3.02M month-over-month, a change representing 1.26% of the company's 232.74M share float. The stock has had a couple of great days, gaining 15.16% over the last week.

6. Health Care REIT Inc. (NYSE:HCN): Engages in investment, development, and management of properties. Market cap of $9.54B. Shares shorted have decreased from 14.00M to 11.79M month-over-month, a change representing 1.24% of the company's 177.99M share float. The stock has gained 15.11% over the last year.

7. J. C. Penney Company, Inc. (NYSE:JCP): Operates department stores in the United States and Puerto Rico. Market cap of $7.10B. Shares shorted have decreased from 30.76M to 29.16M month-over-month, a change representing 1.11% of the company's 144.21M share float. The stock is a short squeeze candidate, with a short float at 16.39% (equivalent to 5.49 days of average volume). The stock has had a couple of great days, gaining 10.01% over the last week.

8. Quest Diagnostics Inc. (NYSE:DGX): Provides diagnostic testing, information, and services in the United States and internationally. Market cap of $9.10B. Shares shorted have decreased from 8.05M to 6.37M month-over-month, a change representing 1.07% of the company's 156.58M share float. The stock has gained 15.72% over the last year.

9. HCP, Inc. (NYSE:HCP): An independent hybrid real estate investment trust. Market cap of $15.50B. Shares shorted have decreased from 25.69M to 21.42M month-over-month, a change representing 1.05% of the company's 405.14M share float. The stock is a short squeeze candidate, with a short float at 5.44% (equivalent to 5.64 days of average volume). The stock has gained 18.6% over the last year.

10. Best Buy Co. Inc. (NYSE:BBY): Operates as a retailer of consumer electronics, home office products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China. Market cap of $10.19B. Shares shorted have decreased from 34.35M to 31.35M month-over-month, a change representing 1.04% of the company's 289.71M share float. The stock has lost 30.95% over the last year.

11. First Solar, Inc. (NASDAQ:FSLR): Manufactures and sells solar modules using a thin-film semiconductor technology. Market cap of $3.98B. Shares shorted have decreased from 22.43M to 21.83M month-over-month, a change representing 1.01% of the company's 59.57M share float. The stock is a short squeeze candidate, with a short float at 37.09% (equivalent to 5.54 days of average volume). The stock has had a couple of great days, gaining 5.25% over the last week.

12. Helmerich & Payne Inc. (NYSE:HP): Engages in the contract drilling of oil and gas wells in the United States and internationally. Market cap of $6.40B. Shares shorted have decreased from 4.97M to 3.92M month-over-month, a change representing 1.01% of the company's 103.91M share float. The stock has had a couple of great days, gaining 13.1% over the last week.

*Short data sourced from Yahoo! Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 12 S&P 500 Stocks With Bullish Short Trends