XLI, the Industrial Select Sector SPDR ETF, has reversed the loosening trend flagged last week — availability has tightened sharply, borrowing costs have nearly doubled, and the fund dropped 2% on Tuesday alone.
The most telling shift is in the borrow market. Availability has tightened from 219% a week ago — the loosest reading in months — back down to 159% now, a 28% contraction in just five sessions. That reversal is notable precisely because the June 17 note had flagged the loosening as evidence of short covering. The direction has now flipped: when availability contracts and costs rise together, it typically signals new shorts entering the pool rather than existing positions covering. Borrowing costs confirm the move — they have nearly doubled week-on-week, from 0.48% to 0.92%, although they remain well below the elevated levels seen in mid-May when the borrow was genuinely stretched. Short interest ticked up modestly, rising about 1% on the week to 21.1 million shares, or 13.9% of the float. That is still well below the late-May peak near 24.2 million shares, so this looks more like a modest rebuilding than an aggressive re-short.
It is worth noting, however, that the lending market is nowhere near as tight as it was during the squeeze episode in late May. Back then, availability compressed to below 5% — effectively every share in the lending pool was lent out — and borrowing costs pushed above 1.1%. The current 159% availability reading puts significantly more cushion between here and that kind of stress. The 52-week minimum availability of just 2.1% is a useful reference point: today's conditions are tight relative to the past few weeks, but still comfortable relative to the year's extremes.
Options positioning tells a slightly different story. The put/call ratio has eased to 3.23 — below its 20-day average of 3.67, and well off the elevated readings above 4.0 that persisted through most of May and early June. That puts the z-score modestly negative, meaning options traders are carrying somewhat less downside protection than usual. The contrast is interesting: the borrow market is tightening again while options hedging has pulled back. Those two signals are not pointing in the same direction, which makes the current setup harder to read as a clean directional bet either way.
The ORTEX short score holds at 63.3, roughly in line with where it has traded all month after pulling back from a high of 66.2 on June 11. The score has been range-bound rather than making new highs, which fits with short interest that is drifting rather than surging. Institutional ownership data from March 31 shows Goldman Sachs trimmed its position by 1.86 million shares — the largest reduction among the top holders — while Morgan Stanley, Wells Fargo, and UBS all added. That broad pattern of additions alongside Goldman's cut offers no strong directional signal from the ownership base.
The fund itself closed at $178.15 on Tuesday, down 2% on the day but still up roughly 3.7% over the past month. The tension between a stock that has recovered well over a longer horizon and a borrow market that is tightening again on a shorter one is the key dynamic to track: whether the renewed short-building is tactical or the start of a more sustained rebuilding toward May's peak levels will show up first in availability and cost-to-borrow readings over the next few sessions.
See the live data behind this article on ORTEX.
Open XLI on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
