XLB — the Materials Select Sector SPDR — heads into the back half of September having shed about 3.5% over the past month, closing Tuesday at $50.73. The week's most interesting story isn't what bears are doing right now. It's how far they've already pulled back from a far more aggressive position just weeks ago.
Short sellers have unwound a substantial chunk of their exposure over the past six weeks. Short interest peaked near 16.2 million shares around August 13, then dropped sharply through late August to around 12.4 million. That's a decline of roughly a quarter, and it puts current short interest at 22.2% of free float — still elevated by any conventional standard, but materially below where it was. The one-month change is actually negative, down 2.2%, even as the past week showed a modest 3.2% uptick. Bears are not fleeing — they're consolidating.
The borrow market is telling a less urgent story. Cost to borrow is remarkably soft at 0.60%, barely moved over the past month despite the high short interest level. That tells you the lending pool is not under stress. Availability has loosened noticeably from where it was mid-week: the reading swung from a tight 25.8% on September 10 to a more comfortable 82.9% by September 15. The 52-week low availability was 3.85%, so recent tightness never approached genuine squeeze territory. Options positioning offers no drama either — the put/call ratio of 0.61 is almost exactly in line with its 20-day average, with a z-score barely below zero. Neither puts nor calls are being accumulated in unusual size.
Institutional flows offer the more interesting thread. The most notable change in the last reported quarter was from Envestnet Asset Management, which added roughly 4.3 million shares to become one of the top holders with a 4.4% stake. Managed Account Advisors and Raymond James also added material new positions — each adding more than 2.7 million shares. Wells Fargo added 2.2 million. These are largely wealth-management platforms, not directional macro bets, but the scale of the buying through Q2 is notable context for a fund that is simultaneously heavily shorted. On the other side, Menora Mivtachim trimmed by 2.2 million shares over the same period. The net institutional picture looks like rotation rather than conviction.
The ORTEX short score of 59.0 sits roughly in the middle of its recent range, having edged slightly lower from 59.9 at the start of the week. That's broadly neutral — not signalling a squeeze setup, not flagging deteriorating conditions. The analyst dataset is stale to the point of being unusable (the most recent coverage date on record is 2008), so the Street's current view on XLB is best described as absent from this data. The earnings history data likely reflects underlying holdings rather than the ETF itself, so those figures are not meaningful in this context.
What to watch: whether the short interest uptick from the past week — the first weekly rise after a sustained decline — marks a genuine rebuilding of the short thesis, or simply noise around month-end rebalancing, will become clearer as availability data continues to swing in the days ahead.
See the live data behind this article on ORTEX.
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