The XLC Communication Services ETF is sending a consistent message across three data streams. Bears have been retreating for weeks. Now options traders are joining that view.
The put-call ratio dropped to 5.22 on July 24. That is the lowest reading in three weeks. The 20-day average sits at 7.30. At -2.0 standard deviations below that mean, this is a statistically significant shift in options positioning. Traders are buying fewer puts relative to calls than at any point in roughly a month.
This matters because the PCR has been persistently elevated. From late June through mid-July, it held above 8.0 on most days. The recent drop below 6.0 — and now below 5.5 — marks a change in character, not just a daily fluctuation.
The short position in XLC peaked near 9.4 million shares on June 25. It now stands at 5.9 million as of July 24. That is a decline of roughly 37% peak-to-trough. SI as a percentage of free float reads 2.6%.
As noted in the previous ORTEX article from July 22, the unwind had already looked like near-capitulation at that point. The data since then has continued in the same direction. Short interest fell another 1% on the day and 3% on the week since that note published. Cost to borrow has fallen 71% over the past month to just 0.61%. These are not the conditions of an active bear campaign.
One data point worth flagging: availability tightened sharply on July 24, dropping to 226% from 468% the prior session. That is still comfortably in "normal" territory — more than two shares available to borrow for every one lent out. The 52-week low on availability was 2.96%, recorded earlier this year when the borrow market was genuinely stressed. The current reading is nowhere near that level. The single-day tightening looks like noise rather than a trend reversal.
The ORTEX short score has nudged back up to 43.3, recovering from a low of 36.5 earlier in the week. That is worth monitoring. A sustained move back above 50 would suggest fresh bearish interest is rebuilding — but at present, the score remains well below the mid-50s readings that coincided with peak short positioning in June and early July.
Three signals now point the same direction: shrinking short interest, cheaper borrow, and a drop in put-call ratio to a three-week low. The outlier to watch is the short score tick higher. If availability continues to tighten alongside a rising short score, that would signal the unwind is finding a floor.
See the live data behind this article on ORTEX.
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