The lending market for XLE has flipped dramatically in one week. Availability has collapsed from 364% on May 12 to just 29% today — every share in the lending pool is now fully lent out, matching the 52-week peak in demand for borrows.
That's a stark reversal from the picture painted just seven days ago, when the borrow market was described as "broadly comfortable." Something has changed materially.
Availability at 29% means fewer than one share remains available for every three already borrowed. A week ago, the ratio was more than 3-to-1 in the other direction.
The cost to borrow has responded. CTB rose 51% over the past week to 0.65% APR. In absolute terms, that's still modest. But the direction and speed matter: CTB has now climbed 58% over the past month, and the move accelerated sharply in the last 48 hours.
Short interest drove the tightening. It stands at 21.3% of float as of May 20 — up from 19.6% just one week ago and the highest level since early April. The build has been relentless. Shorts added exposure on seven of the past eight trading days.
XLE has gained 11.4% over the past month and 6.5% in the past week alone. The fund is trading near a 52-week high, driven by crude oil strength.
Yet short sellers are piling in, not retreating. That's a deliberate bet against the rally — not a passive holdover from earlier positioning.
The ORTEX short score has risen from 45.9 on May 8 to 60.8 on May 18. That's a 14-point move in ten days. It puts XLE firmly in elevated-bearish-conviction territory on ORTEX's composite measure.
The options market reflects the same skew. The put/call ratio sits at 1.69, near its recent range high, with puts outnumbering calls by nearly 5-to-3.
Goldman Sachs added nearly 9.9 million shares in Q1, lifting its stake to 32.6 million shares — 5.4% of the fund. Morgan Stanley added 3.1 million. JPMorgan added 4.0 million. These are net buyers on the institutional side, even as short sellers build the other way.
That divergence — large institutions adding long exposure while shorts press their bets — sets up a genuine tug-of-war.
What to watch: Availability at 29% leaves limited room for further short expansion without pushing borrow costs significantly higher. If CTB accelerates from here, the cost of maintaining the short trade rises — and any sustained price strength could trigger covering pressure fast.
See the live data behind this article on ORTEX.
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