Does a rise in GLD shorts last month suggest the gold rally is growing long in the tooth?

Short-sellers upped their bets against gold in July in what looks in hindsight like a vote of confidence in the U.S. stock market’s ability to hold on to its upward momentum.

The increase in GLD short interest could suggest economic sentiment might be changing for the better. Short-selling interest on GLD jumped by nearly 55 percent in July after having dropped by almost 24 percent the month before.

Last month, the Dow Jones industrial average got off to a rocky start after having rallied 4 percent in June, but after weeks of up and down action, the benchmark still managed to pull off another positive monthly closing, ending 1 percent higher. The increase in GLD shorts might be consistent with rising market.

Still, short interest in the SPDR Gold Trust (NYSEArca: GLD)—the world’s largest bullion ETF—remains very low compared to outstanding longs. In other words, no one was ready to throw in the towel on one of their favorite safe havens amid continuing uncertainty in Europe.

All in all, shorts on GLD still only equate to 5.24 percent of all outstanding long interest in the $65 billion fund.

Mixed sentiment was also seen on U.S. stocks.

Shorts on the SPDR S&P 500 ETF (NYSEArca: SPY)—the world’s largest ETF and a bellwether for U.S. stocks—dropped again in July by 11.6 percent after having slid 22.4 percent in June. The short interest at the end of July represented about a quarter of the outstanding long interest in the fund.

On the flip side, the number of shorts on the PowerShares QQQ, the Nasdaq 100 ETF (NasdaqGM: QQQ), jumped 10.4 percent last month, compared with a decline of 42.6 percent in June. The move put short interest on the “Q’s” at 10.88 percent of the fund’s outstanding long float.

Emerging Markets’ Mixed Tale

Short-sellers also sent a mixed message when it came to emerging markets exposure last month.

For example, short interest in the iShares MSCI Emerging Markets Index Fund (NYSEArca: EEM)—the market’s second-largest emerging markets ETF, with more than $32 billion in assets—surged 23.7 percent.

Shorts on the fund now represent about 5.5 percent of outstanding long interest.

On the other hand, short interest in the iShares MSCI Brazil Index Fund (NYSEArca: EWZ) dropped 6.44 percent and now equates to nearly 23 percent of outstanding long float.

As a final note, keep in mind that when perusing short interest data, it’s important to remember that data can be flawed. Still, short interest data are a great way to gauge sentiment.