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The equity market is headed for a strong year-end rally thanks to the Federal Reserve's latest bond buying program. While going long maybe a good idea right now, there are still some short selling opportunities out there.

Looking at fundamental factors is a good way to look for short selling candidates, but one more indicator that short sellers use is short interest.

Short interest is basically the total number of shares of a particular stock that have been shorted but not yet covered. Short interest is expressed as a percentage. It is calculated by dividing the number of shares shorted with the number of shares outstanding.

Short interest is an excellent way to gauge market sentiment on a particular stock. Once you find a particular stock with high short interest, you can dig deeper into the fundamentals to decide whether it is a good candidate for shorting.

Short interest data is released by stock exchanges periodically. In the U.S., the NYSE and Nasdaq release the short interest data twice every month.

The short interest data for end of August was released earlier this week. I have picked some major stocks that saw a significant percentage increase in short interest between August 15, 2012, and August 31, 2012. The data also includes short interest ratio or days to cover short positions.

Interestingly, the short interest data indicates increasingly bearish sentiment on PC makers and chipmakers. This does not come as a surprise as the growing popularity of smartphones and tablets has hurt PC demand. Add to it the challenging macro environment, and you can see why this is trending now. So here the five companies that saw a significant increase in short interest between August 15, 2012, and August 31, 2012.

Nokia Corporation (NYSE:NOK): The Finland-based company has struggled in recent years as it has failed to gain a strong foothold in the smartphone market. Recently, the company unveiled two new smartphones that would run on Microsoft's (NASDAQ:MSFT) latest Windows Phone 8 operating system. But, there is still a great deal of uncertainty over when the two new phones hit the shelves.

Short interest in NOK rose 13% between August 15, 2012 and August 31, 2012, to 6.6% of the company's total float. The short interest ratio is at 4, which makes NOK a good short candidate.

NOK shares are currently trading around $3. The stock has seen a bit of rebound, but this could be due to short sellers covering their positions.

Hewlett-Packard Company (NYSE:HPQ) and Dell Inc. (NASDAQ:DELL): PC makers have had a hard time due to increasing competition from smartphones and tablet computers. Both HPQ and DELL are also facing a challenging macro environment. And this has reflected in the financial performance of both companies.

Short interest in HPQ rose 17.2% in the latest period to 4% of the company's total outstanding shares. The short ratio for HPQ is 3. HPQ shares are currently trading around $18.50. The stock is up more than 9% this month. I would look to short HPQ at around $20, which has been a stiff resistance level in recent months.

DELL shares are currently trading around $10.80. DELL has gained nearly 1.5% this month. Between August 15, 2012, and August 31, 2012, short interest in DELL rose 14.6% to 3.5% of the company's total float. The short interest ratio for DELL is at 3.5.

DELL shares have found support at around $10.60. I would wait for the stock to rise to around $12 before opening a short position.

Intel Corporation (NASDAQ:INTC): The chipmaker recently lowered its third-quarter outlook, citing weaker-than-expected demand in a challenging macroeconomic environment.

Short interest in INTC rose 15.6% to 3.5% of the company's total float. The short interest ratio for INTC as of August 31, 2012 is 5.

INTC shares are currently trading around $23.40. I would wait for INTC to hit $25 before opening a short position.

With a P/E ratio of 9.90, INTC is attractively valued. But, my major worry is the increasing difficulty in the PC market. The weakness in the PC market is expected to exacerbate in coming months as consumers continue to switch to tablets and smartphones.

Advanced Micro Devices Inc. (NYSE:AMD): Another chipmaker that is struggling due to weak PC demand is Advanced Micro Devices. Between August 15, 2012, and August 31, 2012, short interest in AMD rose 11.7% to 18.4% of the company's float. The short interest ratio for AMD stands at 7.

AMD shares are currently trading around $3.90, above their 52-week low of $3.43. I would look to short AMD at around $4.

Source: Stocks With A Sharp Increase In Short Interest