XME, the SPDR S&P Metals & Mining ETF, enters August with short sellers making an aggressive push against the sector — and the lending market struggling to keep up.
Short interest has climbed sharply, and the scale of the move demands attention. Short interest as a percentage of the free float has risen to 21.9%, up 15% over the past week and 16% over the past month. That is a high absolute level for an ETF and the direction is unambiguously upward. The climb has been steady since mid-July, when shorts held around 4.9 million shares. They now hold just over 6 million.
The borrow market tells the same story with greater intensity. Availability has tightened dramatically — only about 19% of shares remain available to borrow relative to existing short interest, down more than 54% in a single week. Earlier this week availability briefly fell to just 1.6%, the tightest reading of the past 52 weeks, meaning almost no shares were available at all. That level has since eased but remains well inside the "very tight" range. Cost to borrow has moved with it, rising around 15% over the week to 1.54% — still not punitive in absolute terms, but the trend points toward pressure building in the lending pool. The borrow market here is not loose; it is tightening fast against a rising short base.
Options positioning adds a layer of nuance. Hedging demand is present but not at an extreme. The put/call ratio is running at roughly 0.99, just a hair above its 20-day average of 0.94. The z-score of 0.48 places it well within normal range. For context, the 52-week high on the PCR was 2.41, so while put activity is slightly elevated, it is nowhere near the kind of defensive clustering that would signal outright panic. Options traders are cautious, not alarmed.
The ORTEX short score adds context on where this sits historically. At 69.6, the score has climbed steadily from 66.5 in mid-July. It does not represent an extreme — the scale runs to 100 — but the direction of travel is clear and consistent. Institutional ownership is concentrated, with Managed Account Advisors holding close to 17% of shares as of March 31, and a wave of broker-dealers including Morgan Stanley, Merrill Lynch, and Goldman Sachs among the next tier. The Goldman Sachs position was flat in the most recent filing period; Vanderbilt University's endowment and Meitav Investment House added meaningfully into June 30.
The macro backdrop matters for framing this. XME's underlying holdings are directly exposed to copper, iron ore, and broader industrial metals — and recent sector notes have pointed to softness in Chinese demand and retreating commodity prices. The ETF itself has fallen 5.9% over the past month to $100.65, with a further 1.1% loss this week. The short build looks less like a squeeze setup and more like a directional trade against a sector under structural pressure from slowing global growth. Availability near 20% with short interest at 22% of float is a combustible combination if sentiment shifts, but right now the positioning firmly reflects the bears.
What to watch next is whether availability holds above the near-zero levels seen earlier this week — any return to the 1–2% range would mark borrow conditions as the tightest since the lows and could force short sellers to manage their positions more actively, regardless of their macro view.
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