Investors are continuing to bet that stocks will tumble, based on data released by the Nasdaq National Market. According to the Nasdaq, short-interest levels rose to 4,062,490,704 compared with 4,013,408,493 for July, setting a new record for the third month in a row. Investors who short stocks sell borrowed shares, hoping that the price will drop before they have to buy shares to cover their accounts. The short-interest figures are the total amount of shares on the Nasdaq that have been sold short but not yet settled up. Short selling often reflects investor opinion that a stock is about to sink. But an increase in short selling can often presage a rise in a stock's price, since short-selling investors will eventually have to buy shares to cover themselves. The July figures topped the previous record set in April. The data cover all short-interest positions reported between 16 July 16 and 10 August and settled as of 15 August. For the second month in a row, Exodus Communications saw the biggest volume increase in its short interest, rising from 61,251,912 shares in July to 87,890,751 shares in August. The embattled Web infrastructure company has just indicated that it's now ready to entertain takeover offers. The news followed the resignation of three of the company's 10 board members, a plunging stock price and continuing questions about its ability to survive. More bad news seems likely: Exodus dipped below the $1 mark -- a warning flag for possible delisting -- on 27 August, and has lost more than 98 percent of its value since hitting its 52-week high last September. But the investors who shorted the stock this late in the game may not have been able to reap the rewards; shares closed at $1.36 16 July and rose slightly to $1.41 by 15 August. Struggling dot-coms aren't the only companies shorted by investors, however. The company with the second-largest increase in short interest during the month was chip giant Intel, which saw short interest rise from 74,888,055 to 93,199,535. Its shares also went up during the period, closing at $29.13 on 16 July and rising slightly to $29.78 by 15 August. During the month, Intel posted second-quarter results that topped analysts' expectations, but reflected a 76 percent drop in net income from the prior year. Intel scored a major public relations coup when IBM announced it would stop using competitors Advanced Micro Devices' chips in its PCs sold in North America. Analysts are still locked in a battle over when the chip market will hit bottom. Short interest in Cisco Systems went from 84,898,482 to 96,255,131. Cisco reported an 86 percent drop in profits for the fourth quarter, with CEO John Chambers saying at the time that he wasn't quite sure the networking market had reached bottom. Since then, the company has announced a major reorganization, and Chambers has stated that he sees business stabilizing. Shares closed at $17.71 on 16 July and fell to $17 on 15 August. Rounding out the top five increasers, PMC-Sierra saw an increase in short interest from 10,074,936 to 20,798,182, while short interest in Metromedia Fiber Network rose from 18,396,738 to 27,071,916. Nextel Communications led the list of companies that saw the largest volume decrease in short interest, dropping from 48,455,608 in July to 42,144,356 in August. See techTrader for the latest financial news in the high-tech sector. See the Business News Section for full coverage. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the techTrader forum Let the editors know what you think in the Mailroom. And read other letters.