The past six weeks have been a story of rapid repositioning in XLI, the Industrial Select Sector SPDR ETF — shorts built aggressively into late April, then spent most of May unwinding, leaving the lending market in a fundamentally different shape than it was just a month ago.
The lending market tells that story most vividly. Availability collapsed to near nothing in late April: on April 28, 29, and 30 the lending pool was fully exhausted — availability dropped below 3%, meaning for every 100 shares already borrowed, fewer than three remained available to lend. Short interest peaked around that time, touching 28.3 million shares on April 23. Since then, both readings have reversed sharply. Availability has climbed back to 102%, with nearly 29 million shares now sitting free in the pool. Short interest has fallen nearly 19% from its April highs to 21.7 million shares, or 14.2% of the float. The cost to borrow has followed the same trajectory — it ran above 1.0% through mid-to-late May but has since dropped to 0.65%, its lowest level since late April. The lending market, in short, has gone from near-siege conditions to a broadly comfortable state in under five weeks.
The ORTEX short score reinforces that the unwind is underway but not complete. The score registers 65 — firmly elevated, sitting in territory that reflects meaningful bearish positioning relative to the broader universe — but it has drifted down from 67.8 on May 20. That gradual decline tracks the week-by-week reduction in shares short. The direction is clear; the pace is measured. The week ending June 3 saw another 4.4% drop in shares short, the largest single-week reduction in the dataset, yet 14.2% of float remains a high absolute reading for an ETF of this breadth.
Options positioning adds a structural note. The put/call ratio at 3.97 is marginally below its 20-day average of 4.07 — essentially in line with recent norms, and well off the peak of 5.54 recorded in late April when the short squeeze conditions were at their most extreme. The z-score is a mild -0.39, pointing to neither unusual hedging pressure nor unusual bullish tilt right now. For XLI, a broad sector ETF used routinely in hedging strategies, PCR figures structurally favour puts — the relevant read here is that the ratio has normalised from April's defensive extreme rather than signalling any fresh conviction in either direction.
On the ownership side, the top institutional holders largely added exposure through Q1. Morgan Stanley and Wells Fargo each grew positions by over a million shares in the quarter to March 31, while Goldman Sachs trimmed by 1.86 million. Israeli insurance institutions — Menora Mivtachim and Harel — were notable buyers, collectively adding over 3.3 million shares. That buying took place before the April volatility spike; how those flows behaved during the late-April surge in short interest is not yet visible in the data.
The week ahead offers no specific catalyst for XLI itself — no dividend event, no earnings trigger of its own. What to watch is whether the short unwind continues at a similar pace or stalls near the current 14% level, and whether the macro backdrop for industrials — freight trends, ISM data, and capital-goods orders — gives the remaining shorts fresh reason to hold or finally exit.
See the live data behind this article on ORTEX.
Open XLI on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
