The SPDR S&P Metals & Mining ETF has staged a sharp reversal since last week's note, with shorts adding positions into a rally that has left the borrow market still extremely tight — a setup that merits a close read.
Since the previous article flagged a collapsing lending pool and rising short interest, the data has shifted in two meaningful ways. The ETF has bounced 2.3% on the week and 2.7% on Tuesday alone, recovering to $111.94. Meanwhile, short interest climbed a further 5.9% week-on-week to 16.7% of free float — its highest reading in this 30-day window — meaning shorts added exposure into the rally rather than retreating from it. That is a meaningful change from the prior narrative: bears are not trimming, they are pressing.
The borrow picture remains extreme, though it has shifted slightly from last week's tightest point. Availability has nudged higher to 7.4% — still fewer than one share available for every thirteen currently lent out, and firmly in "very tight" territory. For context, the 52-week trough hit 1.15% in mid-August, and availability has spent most of the past month below 10%. Cost to borrow has actually eased, falling 25% on the week to 1.12% — the lowest level in the 30-day window — suggesting the immediate panic premium in the lending market has cooled even as availability stays constrained. The divergence between a loosening borrow cost and a still-locked lending pool is the nuance worth holding onto: the pool is not meaningfully larger, but the price of access to it has normalised.
Options positioning has turned notably more defensive over the past week. The put/call ratio has jumped to 1.01, more than two standard deviations above its 20-day average of 0.88. That is the most defensive options reading for XME in several months, though still well below the 52-week high of 2.41. The move in PCR since mid-September has been steep — it ran below 0.84 through the first two weeks of the month before jumping sharply — tracking almost exactly the surge in short interest. Bears are hedging via options as well as direct short positions.
The ORTEX short score of 66.6, up from 64.9 two weeks ago, reflects the accumulation of these signals. Elevated SI at 16.7% of float, near-zero availability, and a PCR z-score above 2 are all pulling in the same direction. On the institutional side, the most recent 13F data (as of June 30) shows Managed Account Advisors as the dominant holder at 14.1% of shares, having added nearly 377,000 shares in the period — a meaningful accumulation that sits against the short-seller pressure. Morgan Stanley trimmed by 425,000 shares in the same period, the largest reduction among top holders.
The week to watch is whether shorts caught on the wrong side of Tuesday's 2.7% gap have the borrow conditions to reload — with availability at 7.4% and the lending pool still near capacity, the friction for building new short positions remains high even as the cost of holding them has fallen.
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