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• John Paulson's Recovery Fund Gains 27%, His Top Stocks
• Guru Stocks at 52-Week Lows: PTR, VALE, STO, GLD, VMW
• Top Holdings, Paulson Stubborn for Gold, Sprint Shines

• GLD 77% Rate It
• IYR 0% Rate It
• REM 0% Rate It

Short-sellers increased their bets against the ETF market's biggest fund focused on commercial real estate investment trusts, the second-straight month they did so amid deepening concern economic growth might be faltering.

The number of shares of the iShares Dow Jones U.S. Real Estate Index Fund (NYSEArca:IYR) being shorted shot up 40 percent in September after they rose almost 18 percent in August, according to data compiled by IndexUniverse.

The increases come as the Fed has fretted about a flagging job market, and actually launched its third round of "quantitative easing" aimed at keeping borrowing costs low and stoking asset prices. The central bank is worried that weak job growth could derail growth in the world's biggest economy.

Some traders said the spike in IYR shorts could be outright shorts expressing pessimism about REITs; or property holders putting on hedges to protect gains in the market; or even active traders looking to parse the REIT market by shorting one part of it while remaining long another part of it.

"It could be part of a greater spread strategy," said Paul Weisbruch, an ETF trader at King of Prussia, Pa.-based Street One Financial. "IYR used to be the only way to play it, and now you have more opportunity to play real estate with ETFs," Weisbruch said.

He pointed to the iShares FTSE NAREIT Mortgage Plus Capped Index Fund (NYSEArca:REM) as one notable and relatively new fund that focuses on residential REITs. Interestingly, short interest in REM dipped by almost 10 percent last month, according to data compiled by IndexUniverse.

Weisbruch said that makes sense to him insofar as some traders might just be interested in shorting commercial REITs while remaining long residential property via a fund like REM.

IYR is up more than 29 percent in the past year, while REM has risen 22.5 percent.

GLD Shorts

Much of the fretting about the economy has played out in the gold market, which resumed its bull move in the run-up to the Fed's announcement of "QE3."

While short interest in gold plummeted in August as that talk about Fed intervention heated up, it actually moved higher in September.

The number of shares short in SPDR Gold Shares (NYSEArca:GLD), the biggest gold bullion ETF in the world, rose 8 percent last month after falling by almost a third in the prior month.

Where it's all heading is anyone's guess, but the gold ETF market is one place to read the tea leaves.

Data is believed to be accurate; however, transient market data is often subject to subsequent revision and correction by the exchanges.

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