The 46 most-shorted companies in the S&P 500 have risen 32% since Aug. 26, the day before Federal Reserve Chairman Ben S. Bernanke signaled he was willing to buy Treasuries to stimulate the economy, data compiled by Citigroup Inc. in New York show. That compares with 26% for the index.

Netflix Inc. has rallied 69% since Aug. 26 to $212.44 while bearish bets climbed to 25% of shares available for trading, making the Los Gatos, Calif.-based movie-rental service the third most-shorted stock in the S&P 500. AutoNation Inc., the largest U.S. car retailer, has the highest level in the index at 31%. The Fort Lauderdale, Fla.-based company jumped 46% to $33.51 since Aug. 26.

'No More Gasoline'

"When short interest hits an all-time low, you always get concerned that a momentum rally is nearing exhaustion," said Andrew Baehr, head of North America structured sales at BNP Paribas SA in New York. "Capitulation of shorts helped fuel this rally from the start, and now there's no more gasoline."

Bears aren't giving up fast enough to halt the bull market, according to Birinyi. His research and money-management firm was one of the first to tell investors to buy stocks before the S&P 500 rallied from a 12-year low of 676.53 on March 9, 2009.

"I don't see a wholesale capitulation of the short sellers," Birinyi said. "We're still far from the 1 or 2% short interest which characterized most of the 1990s and the previous decade. The bears haven't thrown in the towel."

Shares sold short have made up 2.3% of the U.S. stock market on average since 1995, according to data compiled by NYSE. The level was 1.9% from 1995 to December 2007. The world's largest economy shrank 4.1% from the fourth quarter of 2007 to the second quarter of 2009, the most during any recession since the 1930s, according to the U.S. Department of Commerce. Short interest peaked at 4.9% in July 2008.

Positive Impact

Bearish bets have held steady when adjusted for lower stock trading. They amount to 2.9 times the average daily volume on U.S. exchanges this year, data compiled by Bloomberg show. The level compares with a median of 2.8 in the past three years.

"If the equity rally continues, we expect the positive impact of short covering to be the same," said Pierre Lapointe, a strategist with Brockhouse & Cooper Inc. in Montreal.