SOXX closed Tuesday down 7.9% to $603.39 — a brutal single-session reversal that rewound most of the ETF's weekly gain and handed bears their best day in weeks.
The borrow market just flipped back against the bulls. Availability has collapsed from 85% last Sunday to 36% Tuesday — the sharpest one-week tightening in the current cycle, down nearly 49 percentage points. That is not a gentle drift; it is a pool being rapidly drawn down as new short positions are opened. The 52-week low remains 0.43%, reached earlier this month when lending was essentially exhausted, and the direction is unmistakably back toward that range. Cost to borrow has crept back up to 2.10%, up 10% on the week and now more than double where it traded in mid-May. The lending market is tightening again, and it is doing so fast.
Short interest reinforces that picture. Bears hold 18.2% of free float — virtually unchanged from the 18% flagged in the previous note, confirming that no meaningful unwind has occurred since then. The monthly build is now 32.5% higher than a month ago, the largest 30-day accumulation in the current dataset. Days to cover sits at 1.1 per the most recent FINRA settlement, which keeps squeeze risk moderate rather than acute, but the trend is clear: this is a position being rebuilt, not liquidated. The ORTEX short score of 66.5 has held in a tight range all week, consistent with an entrenched rather than accelerating conviction short.
Options tell the more surprising part of the story this week. Defensive positioning has actually eased — put/call ratio dropped to 2.39, two standard deviations below its 20-day mean of 3.03 and the lowest reading in the past 30 days. Against a backdrop of rising short interest and tightening borrow, that is a genuine divergence. One interpretation: hedgers who were loading up on puts through May and into early June have taken some profit after the 12% one-month rally in the ETF. The 52-week PCR range runs from 1.28 to 3.73, so today's 2.39 sits comfortably in the middle — not a bullish signal, but a meaningful step back from the near-maximum fear that characterised positioning six weeks ago.
On the institutional side, Goldman Sachs added 484,000 shares in Q1 to become the largest holder at 6.2% of shares. Susquehanna built an even larger relative position in the same period, adding 1.19 million shares to reach 2.6% of the float — the biggest percentage-point gain among top holders. Jane Street entered from scratch, acquiring 595,000 shares. These are March 31 filings and reflect pre-tariff-escalation sentiment, so the picture may have shifted materially since. The net message is that major broker-dealers were positioning long heading into Q2 volatility, which provides some structural demand beneath the short interest pile.
What to watch: availability has now reversed course twice in ten days — down to near-zero in early June, back to 85% by last weekend, and already halved again Tuesday. Whether that tightening stabilises or resumes its descent toward single digits is the clearest short-term signal the lending market offers on how aggressively new bears are entering the trade.
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