Historically, stocks that recently outperformed the broader market despite a large amount of short interest were more likely to trade higher within two weeks. In these cases, short interest can be a bullish signal. The reason: Short sellers lose money when the underlying price rises, and the more price climbs, the more likely they will cut losses and buy their positions back — a "short-covering" rally. This analysis suggests one way to find potentially bullish stocks by combining short interest and relative strength.