Be gone with ye, short-sellers! The bull is here in full force and all you can do is gather up your unwanted pessimistic sentiments and run for your lives.

At least that's the story recent data seem to be telling.

According to a Bloomberg article earlier in the week, through January, the percentage of shares sold short had dropped for four straight months, reaching a level last seen in 2007. NYSE Euronext data had short sales at 3.3% of all stocks in January. That's down from a peak of 4.9% in July 2008.

Apparently, short-sellers have gotten sick and tired of finding themselves on the wrong side of the bull horns as the S&P 500 has marched up nearly 100% since the lows of 2009. To the extent that we're talking about institutional investors -- who make up a substantial chunk of the short-sellers -- we're talking about getting hit where it hurts most, the wallet. As the rising market has kneecapped short positions, investors may be getting fed up with the lousy performance of short-selling managers.

To worry or to cheer? That is the question
I recently wrote about bullish comments from noted bear Nouriel Roubini and remarked that when uber-bears start to capitulate, it worries me. After all, when everybody's bullish, who's left to help push up the market?

This note about short-selling has a similar flavor to it. If short-sellers are truly waving the white flag, then the bull market could be entering a phase of complacency and overconfidence that would likely end badly.

Of course, as the Bloomberg article helpfully points out, the average of shares sold short has been 2.3% since 1995, and it was 1.9% between 1995 and December 2007. So there's definitely an argument to be made that there's still an excess amount of short positions that need to be worked off. And that, optimists, would only push the market higher.

The micro picture
That's the broad market, though. Drilling down to individual stocks -- where many of us Fools spend our time and investment dollars -- short-sellers are still finding their targets and, in some cases, going after them with serious gusto.

China MediaExpress (Nasdaq: CCME) investors, for instance, probably don't feel the short-selling retreat. As of the latest numbers from Capital IQ, nearly 70% of the stock's float has been shorted as sellers have jumped on research that suggests the company is fraudulent.

Ditto for ATP Oil & Gas (Nasdaq: ATPG) and Corinthian Colleges (Nasdaq: COCO), which have short percentages at 43% and 34%, respectively. Investors have been concerned about ATP's ability to deal with a hefty debt load (though some Fools heartily disagree), while the full-on assault on for-profit colleges has helped clobber Corinthian.

Will the broad decline in short-selling help these situations? It's certainly possible. Since late August, the 46 most-shorted companies in the S&P 500 rose 32%, beating the overall index. However, to really get the shorts off their backs, these companies may simply have to prove them wrong.

Want to keep up with these short-selling skirmishes? Add these stocks to your free, personalized, Foolish watchlist.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.