SMH closed June with a sharp reversal in the short story: the bearish build that defined the previous note has started to unwind, even as the ETF itself climbed to $655.89 — up 5.4% on the week and nearly 10% over the past month.
The positioning shift is the most important development this week. Short interest peaked near 15.6 million shares on June 25 and has since pulled back to 13.9 million — a 10% drop in five sessions. At 13.6% of free float, bears still hold a meaningfully elevated position by ETF standards, and the one-month build of 26% remains on the books. But the weekly direction has turned: shorts trimmed roughly 1.2% of free float over the past five days, suggesting some unwinding as the price moved against them. The borrow market confirms the easing. Availability has loosened dramatically — from 29% on June 26 to 148% by June 30, a near-fivefold expansion in four sessions. That's not a distressed lending market; at 148%, there is now roughly 1.5 shares available to borrow for every one already borrowed. Cost to borrow has also eased, falling 11% on the week to 1.22%, back near its recent floor. The 52-week minimum availability reading of 5.7% remains a reference point for how tight this borrow can get — the current level is nowhere near that.
Options traders have pulled back slightly from peak defensiveness, but remain cautious. The put/call ratio closed Tuesday at 3.62 — the highest reading of the past year — before easing to 3.42 by June 30. That still sits above the 20-day average of 3.09, roughly 1.2 standard deviations elevated. For context, the 52-week low on the PCR was 0.54, so the current level represents sustained, structural hedging demand rather than a one-day spike. The options market has been consistently more defensive than its own recent history for several weeks running, even as the price climbed.
The ORTEX short score has followed the broader trend. It peaked at 66.1 on June 25 — the highest reading in the recent window — and pulled back to 62.1 by June 30. That decline mirrors the short interest retreat: as shorts trimmed and availability loosened, the composite pressure reading eased. The score remains above 60, which keeps bearish positioning in the elevated zone, but the direction of travel is now lower for the first time in several weeks.
Institutional ownership data, last reported as of March 31, shows Morgan Stanley holding the largest disclosed stake at roughly 19% of shares, followed by LPL Financial at 10% and JPMorgan at 6.5%. Both Morgan Stanley and JPMorgan added materially in Q1 — Morgan Stanley by over 2.8 million shares, JPMorgan by 695,000 — while Goldman Sachs trimmed by 303,000. These are Q1 figures and may not reflect the sharp moves since April, but they sketch a picture of large broker-dealer and wealth-management demand rather than pure directional conviction.
The tension worth watching heading into July is whether the short cover continues or stalls. Shorts have pulled back from the June 25 peak, but 13.6% of free float is still high for an ETF vehicle. The borrow market has loosened sharply — that removes one source of mechanical pressure — but the put/call ratio staying well above its 20-day average suggests options traders have not yet matched the optimism implied by the price action.
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