XME, the SPDR S&P Metals & Mining ETF, heads into July with a striking split: short sellers rebuilt positions aggressively through June even as the fund dropped 14.6% over the month, and the borrow market has now tightened to one of its most constrained readings of the past year.
The lending story is the sharpest angle this week. Availability has collapsed to just 8.7% — meaning for every share currently lent out, barely one-twelfth remains available to borrow. Three weeks ago, on June 10, availability was running above 190%. The shift has been rapid and sustained: since June 22 the borrow pool has been effectively fully used on most sessions, with cost to borrow climbing 24% over the week to close at 2.0% annualised. That cost is still modest in absolute terms, but the direction is clear. The lending market is tight in a way it was not at the start of June.
Short interest itself tells a nuanced story. At 18.1% of free float, the short position is genuinely large for an ETF product. Over the past month it climbed about 12%, with the bulk of the build concentrated in the first three weeks of June. This week, however, shorts trimmed — positions fell roughly 10% week-on-week to around 5 million shares. That partial unwind, against a backdrop of nearly exhausted availability, creates a tension: the bears who want to press the trade further face a borrow market that is actively fighting them.
Options positioning has shifted more defensive at the same time. The put/call ratio closed the week at 1.02, a notch above its 20-day average of 0.91 and roughly one standard deviation elevated. That is not an extreme reading — the 52-week high is 2.45 — but it marks a clear break from the 0.82–0.83 range that held through most of early June. The options market is pricing in more caution than a month ago, consistent with the broader price slide.
The ORTEX short score of 67.5 places XME in firmly elevated territory on a percentile basis, and the score has been sticky in the 67–68 range for the past two weeks after jumping sharply higher from 62 in mid-June. That jump, from June 17 to June 18, coincided with a wave of new short supply entering the market before availability began its subsequent collapse. The score's persistence near 68 reflects the combination of high SI, tight availability, and rising borrow cost — three factors that tend to cluster when a short trade becomes structurally stressed.
The key dynamic to monitor is whether availability tightens further from its current 8.7% reading toward the 52-week low of 3.0%, and whether that pressure forces more short covering or simply caps new supply — the difference between a gentle unwind and a more disorderly squeeze.
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