XLU has now shed nearly 4% over the past month, and since the last note published a week ago, the short-side rebuild has continued — SI is up another 5% on the week, and the borrow market is tighter than it was when that note flagged the trend.
The lending picture has deteriorated meaningfully since last Tuesday. Availability has dropped to just 12% — meaning there is barely one share available to borrow for every eight already lent out. That is less than half what it was a week ago, when availability ran near 30%. Earlier in May, on May 14, availability briefly collapsed to 6.5%, the tightest reading of the past 52 weeks. The current level is not far off that extreme. Cost to borrow, now at 0.72% APR, remains low in absolute terms — this is not a forced-cover setup — but it has more than doubled from the 0.32% reading in late April. The direction of travel is unambiguous.
Short interest itself reinforces that picture. SI has climbed to 11.1% of the float, up 22% over the past month and 5% just in the past week. The absolute number — roughly 27.5 million shares short — is the highest it has been since the brief spike around April 8–9, when tariff-shock volatility briefly pushed shorts above 30 million shares before a fast unwind through mid-April. That unwind took availability from the low-80s all the way to 320% by April 20. The rebuild since then has been swift and consistent: availability has gone from effectively unlimited in late April to critically tight in under four weeks. Shorts are re-engaging with real conviction.
Options positioning adds another layer to the defensive read. The put/call ratio is running at 2.74, above its 20-day average of 2.65 and at the upper end of its recent range. The z-score of 1.38 is elevated but not extreme — this is not a panic-driven options skew. Rather, it reflects a steady accumulation of puts relative to calls, consistent with investors using options to hedge a utility ETF that has become a funding source as risk appetite returns elsewhere in the market.
Institutional flows are worth noting in that context. The latest 13F data shows JPMorgan added 4.5 million shares in Q1, UBS added nearly 8.9 million, and BNP Paribas added 1.9 million. These are sizable additions, which makes the simultaneous rebuild in short interest more interesting — it suggests the short side is a deliberate macro or rotation trade, not a lack of buyers. The ORTEX short score of 55.4 has crept higher across the past two weeks, consistent with the gradual tightening in borrow conditions.
What to watch: availability is the key variable. At 12%, the lending pool has little room left before another squeeze dynamic becomes possible — whether further tightening brings borrow costs higher, or whether availability rebounds as it did sharply in mid-April, will tell the story of whether the short rebuild has room to continue or faces a mechanical ceiling.
See the live data behind this article on ORTEX.
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