Even as the stock market continues its long march back from the lows of mid-September, the number of people betting against its stamina continues to reach record heights.

Short interest on the

New York Stock Exchange rose to a record level for the 10th-consecutive month -- up 2.8% to 6.45 billion shares in mid-December, from 6.27 billion shares in mid-November.

The rise in shares shorted -- or stocks borrowed by investors who hope to buy them back later at a cheaper price -- runs counter to gains on the major stock market indices. Since hitting their postattack lows Sept. 21, the

Dow Jones Industrial Average is up about 23% and the

Nasdaq Composite has risen about 38%. The

S&P 500 is ahead 20%.

But among the bears on Wall Street, there is increasing skepticism that the autumn rally will last through winter. "It's hard to believe the biggestbull market in history is going to be corrected with a short bear market," said David Tice, manager of the

(BEARX) - Get Report

Prudent Bear fund, a short-selling mutual fund.

Law of the Jungle

Conventional wisdom dictates that companies with the softest earnings outlooks are most likely to see their shares fall, and therefore are the most attractive targets for short-sellers.

It makes sense, then, that the top-four short positions on the NYSE were hard-hit telecom stocks

Sprint PCS

(PCS)

,

Global Crossing

(GX)

,

Lucent

(LU)

and

AT&TWireless

(AWE)

.

Bankrupt energy trader

Enron

(ENE)

was right behind them in fifth place.

Many other companies going through a rough patch have not found their way onto short-sellers' radar screens, but they may in the near future. There hasbeen a deluge of profit warnings from both blue-chip and tech firms in recent weeks. "I don't see many people who are making money," said Tice. "And discounts are pervasive in the malls."

Over the crucial preholiday weekend, malls stayed open late and retailers slashed prices. Despite some isolated instances of optimism Wednesday and improving consumer confidence, it's shaping up to be a weak shopping season.

Stunted Growth

In tech land,

Motorola

(MOT)

said weak demand will force it to report first-quarter earnings below Wall Street's expectations, and

Solectron

(SLR)

also lowered guidance.

Still, not everyone thinks the market is ahead of itself. "We had a real rocket, and we've come down from the highs," said Peter Blatchford, a traderat Miller Tabak. "I think we'll resume the rise from here."

Getting Shorter
Short positions on the NYSE going back 12 months

Source: NYSE

For his part, Blatchford isn't convinced the short-interest data necessarily mean there is a growing number of bears on Wall Street. The wayhe explains it, a lot of securities firms are selling stocks short as hedges in neutral transactions -- and this is reflected in the data.

"Twenty years ago, short interest was a reasonable expression of investor sentiment," Blatchford said. "While it isn't insignificantnowadays, it doesn't have the kind of importance it once did."