XLK has surged 22% over the past month to $198.21, yet short sellers are not backing down — and the borrow market just flashed its tightest reading since late April.
The divergence flagged in last week's note has deepened. SI has edged up to 15.6 million shares, 4.8% of float, with a 5.3% single-day jump recorded on June 2. The month-on-month rise is now nearly 12%. Bears were adding into the May rally; they are still adding into a further leg higher. The pattern is consistent: this is not opportunistic shorting on weakness, it is a deliberate hedge build against a rising ETF price.
The more telling development is in the borrow market. Availability collapsed to 205% by June 2 — down from 429% just the session before, and less than a quarter of the 802% reading seen in late April. That April level was the loosest borrow conditions XLK had seen in months. The move to 205% is the tightest availability of the past six weeks, even if it still sits well above genuinely squeeze-risk territory. Borrowing costs remain negligible at 0.54% — a touch firmer than last week's 0.48% but still clearly in "easy borrow" territory. The tightening in availability is a volume story, not a rate story: more shares are being borrowed, but there remains ample supply to accommodate further demand.
Options positioning has turned meaningfully more defensive. The put/call ratio hit 2.26 on June 2 — more than three standard deviations above its 20-day mean of 2.01. That is the sharpest defensive skew in the recent data window. To be clear, XLK's PCR runs structurally elevated relative to single stocks — the 52-week range spans 1.34 to 8.12 — so a reading of 2.26 is far from extreme in absolute terms. But the z-score of 3.25 signals that the jump above the recent baseline is statistically unusual. Traders who spent the last three weeks running near-average hedge ratios are suddenly reaching for more protection into the weekend.
The ORTEX short score jumped to 44.9 on June 2 from 38.2 the prior session — the largest single-day move in the 10-day history and the highest reading in that window. Combined with the availability tightening and the PCR spike, a consistent picture emerges: multiple positioning signals shifted in the same direction on the same day. That kind of alignment, even in a structurally easy-borrow ETF, is worth noting when the underlying has just printed a 22% one-month return.
The institutional holder base offers no near-term catalyst. The most recent 13F data (as of March 31) shows Wells Fargo, Morgan Stanley, and UBS among the largest holders, with UBS adding roughly 3.4 million shares in the quarter — the largest single holder increase in the top-15 list. That flow reflects Q1 appetite when XLK was trading at lower levels; it says little about current conviction. What to watch next is whether the availability reading — which halved in a single session — continues to compress, and whether that borrow demand is accompanied by a further step-up in the short score. If availability drops below 100% while the PCR z-score holds elevated, the hedge story becomes harder to dismiss as routine end-of-week positioning.
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