XLB has settled into a holding pattern — short interest remains heavy at 24.4% of free float, but the borrow market's wildest days appear to be behind it, at least for now.
The previous note flagged a sharp retreat from the July 6-9 squeeze, when availability briefly collapsed to near zero and shorts peaked around 17 million shares. That retreat has continued, but it has slowed materially. Short interest ticked up 2.1% on Tuesday alone, and the week-to-date change is essentially flat — down less than 1% on the week to 14 million shares. The month-on-month figure is still up 2.4%, which means the big unwind from the early July peak has not translated into a sustained exit. Shorts rebuilt partially after covering, and they are now sitting at a level roughly consistent with where the fund was trading before the squeeze. The overall positioning picture is: still elevated, no longer in crisis, but not cleanly resolving in either direction.
Availability tells the most interesting part of the current story. It has loosened substantially from the July 6 floor — when essentially every share in the lending pool was lent out — and now reads at 69.8%. That is a meaningful improvement, but it masks significant day-to-day volatility. Last Monday it dipped back to 45%, and as recently as July 15 it was below 21%. The 52-week low availability was 3.9%, set during the acute squeeze phase; the fund has clearly stepped back from that edge, but availability is nowhere near relaxed territory. Cost to borrow has dropped with it, easing another 13% on the week to 0.53% — close to the lowest reading of the past 30 days. Borrowing is cheap again, which removes one mechanical source of pressure on existing short positions.
Options positioning adds little noise to the story this week. The put/call ratio is running at 0.62, almost exactly in line with its 20-day average of 0.61, and the z-score is barely above zero. That is a notably muted reading given the 52-week range runs from 0.47 to 8.82 — at the current level, options traders are expressing no particular directional conviction. The absence of options drama is itself a signal: after the early July volatility, the derivatives market has reverted to a baseline that implies calm rather than continuation.
The ORTEX short score has drifted lower over the week, from 64.3 on July 8 — during the peak squeeze — to 60.2 today. The score remains firmly in elevated territory and has been range-bound between 60 and 62 for the past six sessions. That consistency suggests the data inputs driving the score (short interest level, borrow conditions, price momentum) are no longer moving in a single direction. The week's modest 1.1% price decline to $50.10, following a 3.3% drop over the past month, keeps the price trend softly negative but not accelerating.
On the institutional side, the most recent filings (as of March 31) showed notable fresh buying from BNP Paribas, Wells Fargo, Citadel, and Bank of America — each adding more than two million shares in Q1. Morgan Stanley and Goldman trimmed positions. Whether that institutional support has held through the second quarter's materials-sector softness remains an open question until the next round of 13F filings.
The next catalyst to watch is any shift in the availability reading. The last three weeks have shown it can move 40-50 percentage points in a single session — any return toward the tight zone below 30% would signal fresh borrow demand and potentially reignite the conditions that drove the July squeeze.
See the live data behind this article on ORTEX.
Open XLB 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.
