XLK has gained 3.4% on the week to close at $190.52 — and the short sellers who were pressing the position hard through mid-June are now actively pulling back.
The reversal in short positioning is the headline development. Short interest has dropped 21.7% over the past week, falling from roughly 20 million shares to 15.8 million, bringing SI as a percentage of free float down to 4.8%. That is a meaningful unwind. The previous note, published June 24, caught the first crack in the bear case — a single session where shorts trimmed 7% even as the stock sold off. That crack has since widened into a sustained retreat. Bears had added roughly 25% cumulatively to their position between late May and peak mid-June; a quarter of that build has now been reversed in less than two weeks. The ORTEX short score confirms the direction of travel, easing to 39.2 from a recent high of 47.1 on June 22 — the lowest reading in the past two weeks and a clear step toward neutral territory.
The borrow market reflects that retreat in full. Availability has loosened considerably, running at 376% — more than twice the level seen during the tightest point of the prior squeeze and well above the 52-week low of 40.6%. There are now roughly three shares available for every one currently borrowed. Borrowing costs have also eased, pulling back 18% on the week to 0.66%. The CTB had briefly climbed above 0.96% on June 22, when short interest was at its highest; that friction has now largely disappeared. Taken together, the lending market signals a comfortable, uncrowded short — nothing that would pressure existing bears to cover in a hurry.
Options positioning tells a slightly different story, and the contrast is worth noting. The put/call ratio has dropped to 1.50 — about one standard deviation below its 20-day average of 1.78. That is actually a less defensive posture than the ETF has carried for most of the past month, when PCR was running well above 2.0 during early June. The recent compression may simply reflect the week's rally washing out some of the hedges that were layered on during the drawdown. It also puts current PCR close to the 52-week low of 1.34, suggesting that options traders have moved toward their most constructive positioning of the year. The divergence is interesting: short sellers are trimming while options hedgers are also unwinding protection — two separate groups reaching the same directional conclusion as the stock recovers.
The macro backdrop for tech is supporting the move. The prior note flagged that XLK had traded down to $184 on a 4% single-session drop; the ETF has since added more than 3% and is knocking on $191. On a one-month basis the fund is essentially flat, down just 0.3%, which understates how much ground has been recovered from the mid-June pullback. The score composite sits at 39.2 — below the 50 midpoint on the ORTEX scale, which places the overall short-side setup in moderate rather than elevated territory. If the short score continues to drift toward 30, it would represent a full normalization back to pre-May positioning levels.
What to watch next: whether the short interest reduction continues through the first week of July, or whether the remaining 4.8% float short position holds firm as the ETF tests new recovery highs — the answer will say a great deal about how much conviction the remaining bears have left.
See the live data behind this article on ORTEX.
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