XLI, the industrial sector SPDR, enters mid-May in a notably different shape than it was just two weeks ago — shorts have covered aggressively, borrow has eased, yet the ORTEX short score remains elevated, hinting the structural bear case against US industrials hasn't fully unwound.
The most striking move in the data is the sharp short-covering since late April. Short interest peaked near 28.3 million shares on April 23, touching the highest level in the 30-day window. It has since fallen to 21.5 million shares — a drop of roughly 18.5% over the past week alone and about 12.8% over the past month. That's a decisive unwind. The official FINRA figure, which settled at the end of April, still showed 23.9 million shares short with a days-to-cover of 2.6 — so the real-time estimate is now running well below that already-dated number, confirming the covering continued into May.
The retreat in short positions has gone hand-in-hand with a loosening borrow market. Cost to borrow came in around 0.70% APR on Tuesday — down 22% on the week, pulling back from the 0.93% peak seen in late April. That April peak coincided precisely with the period when the lending pool was fully tapped: utilization hit 100% on April 28–30, meaning every share in the pool was lent out. That episode has since passed. Availability has reopened, and the borrow market has moved back toward normal for an ETF of this size. Options positioning adds a further layer of context. The put/call ratio at 4.50 is structurally very high for any instrument, but it's running almost exactly in line with its 20-day average of 4.53 — a z-score near zero. That consistency suggests the persistent put-heaviness reflects ongoing portfolio hedging rather than a new surge of directional bearishness. The 52-week high PCR of 5.54 was hit on April 22 — right at the peak of the short-selling episode. It has since normalised without collapsing, which fits the picture of cautious but no longer panicked positioning.
The short score of 66.3 is notable given the covering. It has eased from its recent peak of 68.6 on April 30 but remains well above mid-range, reflecting that the structural setup — elevated SI relative to float at 14.1%, still-meaningful borrow demand, defensive options posture — hasn't been dismantled. The YTD price gain of 12.4% and the MACD reading of 1.44 alongside an RSI of 55 put the technical picture in neutral-to-positive territory. The fund closed Tuesday at $174.35, up 1.1% on the week and 1.6% on the month. That recovery runs parallel to the covering — as shorts exited, the fund drifted higher.
ETF fund flows for the industrials sector offer a sobering counterpoint. On a one-week basis, industrials ETFs are almost perfectly balanced between inflows and outflows, generating a net flow of just -$7 million — effectively flat. The flow imbalance score of 49.9 out of 100 confirms buyers and sellers are at a standstill. That puts industrials in stark contrast to information technology, which attracted $3.7 billion in net inflows over the same period, and materials, which pulled in $660 million. There is no crowd chasing the industrial trade this week.
What to watch is whether the short score continues its drift lower — currently ticking down from 68.6 to 66.3 over the past two weeks — or stabilises around current levels if fresh macro headwinds (tariff developments, manufacturing data) give short sellers a reason to rebuild. The borrow cost trajectory, now pulling back from its late-April spike, will signal whether the next wave of positioning is building or dissipating.
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