The SMH lending market has reversed course with unusual speed. Availability has collapsed from 93% last week to just 39% today — a drop of more than half in five sessions. That shift coincides with a 66% surge in cost to borrow, now at 1.47%.
The previous note flagged a comfortable, easing borrow market. That picture has changed materially.
Availability at 39% means roughly one share remains available for every 2.5 already lent out. It's not yet a stressed market — the 52-week minimum hit 5.7% — but the direction is abrupt. One week ago availability stood at 93%. The move from loose to tight happened in three sessions.
Cost to borrow tells the same story. It printed at 0.87% last Wednesday. It closed Tuesday at 1.47%. That's the highest level in two weeks, driven by fresh demand for borrows against the ETF's recent bounce.
SI stands at 13.8% of free float — 14.1 million shares as of July 8. That is up 8.6% on the day and roughly flat on the week. The prior note described a slow unwind from the June 25 peak of 15.6 million shares. That unwind has stalled. Bears are not covering into the rally.
The one-month build remains intact: SI is up roughly 15% over 30 days.
The put/call ratio has dropped sharply. It sits at 2.79 today, down from 3.61 at its late-June peak. The 20-day mean is 3.14, and the current reading is 1.3 standard deviations below that average. Options traders have been cutting put exposure even as the borrow market tightens — a split in sentiment worth watching.
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