The XLC Communication Services ETF has spent the past six weeks telling one consistent story: bears are leaving, and the data keeps confirming it.
Short interest has now fallen to 2.5% of the free float — down 36% from its June peak of roughly 9.4 million shares. The unwind that ORTEX flagged as near-capitulation in late July has continued without interruption. Tuesday's single-session drop of 9.4% in short shares is the most dramatic move yet in what has been a steady, weeks-long retreat. From the June 25 peak of 8.9 million shares to Tuesday's reading of 5.6 million, bears have cut their position by roughly 40%.
The lending market tells the same story in a different register. Borrow availability has loosened dramatically — from a 52-week low of just 3% in late June, when the pool was almost entirely consumed, to 207% now, meaning there are roughly two shares available for every one currently borrowed. Cost to borrow has fallen in parallel, dropping more than 60% over the past month to 0.54% — well within normal territory for a liquid large-cap ETF. The borrow market, which was signalling genuine stress in June, has normalised.
Options positioning has shifted, though the picture here is more nuanced. The put-call ratio has eased to 5.6, below the 20-day average of 6.5 and roughly one standard deviation below it — confirming the directional turn flagged in the July 27 ORTEX note, when the PCR first broke meaningfully below the 8.0-plus range that had persisted through most of June and early July. The absolute level of the PCR still looks elevated in any conventional sense, but for XLC it is near the lower bound of its recent range, with the 52-week low at 0.74 and the high at 12.05. The shift is real; the positioning is less defensive than it was, not outright bullish.
The short score has drifted lower in recent sessions, easing from 48.5 on July 31 to 43.7 as of Tuesday. That is a mid-range reading with no distress signal attached — consistent with a position that has already been substantially reduced rather than one that is freshly building. The ETF itself gained 2.2% on the week to close at $112.04, adding to a month-to-date gain of the same magnitude. Valuation data is flagged as stale (as of late September 2025) and is omitted here; the PE and price-to-book multiples in the snapshot predate the current price level and should not be read as current.
The key question now is whether the short unwind has fully run its course or whether the remaining 5.6 million short shares represent a residual structural hedge position that will persist regardless of price action. With availability loose, borrowing costs low, and the short score mid-range, the next signal worth watching is whether the PCR continues to compress toward the lower end of its recent range — or whether defensive positioning rebuilds as markets digest the macro backdrop heading into the back half of August.
See the live data behind this article on ORTEX.
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