Short interest in XLB — the Materials Select Sector SPDR ETF — has fallen sharply. It is now at 26.4% of float, down 15.5% over the past week and 18.3% over the past month. Yet the borrow market tells a different story: availability remains tight, with nearly nine out of every ten lendable shares already out on loan.
Short interest peaked near 21 million shares in late March and early April. It has since dropped to around 15.2 million. That is a material retreat by bearish traders — the lowest level since mid-March.
But covering hasn't freed up much room in the lending pool. As of April 30, the lending market was at 87% utilization — meaning availability sits at roughly 13% of the pool. That is still well inside tight territory. As recently as April 24, the figure hit 97%, with the 52-week peak touching 100% earlier in April on multiple sessions (April 3, 6, 7, 9, and 30 March).
Cost to borrow has eased from its early-April highs — it briefly touched 1.06% on April 7 — and now sits at 0.71%. That is a modest level in absolute terms, but still up 18% week-on-week, a signal that fresh demand to borrow is nudging against constrained supply.
The put/call ratio tells a striking story. In March and early April, the PCR ran consistently above 1.2 — heavily skewed toward puts, reflecting strong bearish positioning. By late April, the ratio had collapsed to around 0.60, near its 52-week low of 0.59.
At a PCR z-score of -1.02 versus the 20-day mean, options positioning has flipped decisively away from the pessimism that dominated six to eight weeks ago. Traders who were hedging hard against materials weakness have largely stepped aside.
Despite the short interest decline, the ORTEX short score remains at 63.5. It has held in a band of 63–65 over the past two weeks. A score above 50 signals the stock still has above-average short pressure relative to its history. The score hasn't materially deteriorated even as shares short fell — likely reflecting that the remaining short base is sitting against a still-constrained lending pool.
Susquehanna International Group added over 3 million shares as of the last reporting period. Millennium Management built a position of 1.67 million shares, nearly all of it new. On the other side, Barclays trimmed by over 9.5 million shares — one of the larger holder-level moves in the dataset.
The tension here is clear. Short sellers are exiting, but the borrow pool hasn't opened up meaningfully. If availability tightens back toward the 3–5% range seen in early April — when all lendable shares were fully deployed — remaining shorts face a harder exit. The PCR near its 52-week floor suggests the options market has already moved on. The lending market hasn't caught up yet.
Data summary
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