XLC, the Communication Services Select Sector SPDR ETF, enters June with short sellers meaningfully pulling back — just as the price itself wobbles and AT&T, one of its top holdings, slides on fresh selling pressure.
The most striking shift in positioning is the sharp unwind of bearish bets over the past month. Short interest has fallen roughly 17% from its mid-May peak, dropping from around 6.9 million shares on May 15 to just under 5 million now — cutting SI % of free float to 2.2%. That's a low reading for this ETF, and the direction is clearly downward. The story in the lending market confirms the retreat: cost to borrow has fallen by more than a third over the past month, now just 0.54%, and availability has opened up substantially. With availability at 258%, there are more than two and a half shares available to borrow for every share already shorted. That's a relaxed borrow environment, far removed from the tightest reading of the past year — the 52-week low availability of just 2% — which was hit during a period of concentrated short pressure. The short score, which reflects the overall intensity of bearish positioning signals, has also eased from around 47 in mid-May to 42 today, confirming the general retreat.
Options tell a different story, and that contrast is worth naming. The put/call ratio is running at 7.66 — structurally elevated, but that's characteristic of how XLC options trade rather than an active signal of fresh bearishness. The ratio is almost exactly in line with its 20-day average of 7.49, with a z-score barely above zero at 0.33. There is no unusual options skew this week. The 52-week range for PCR on this ticker swings from 0.74 to 12.05, so the current reading sits comfortably in the middle of its historical band. Options positioning, on balance, is neutral.
Valuation data in the snapshot carries a September 2025 timestamp, making it too dated to draw firm conclusions about current multiples. The broad context is cleaner: at $113.57, the ETF has slipped about 1.8% on the week and is down nearly 2.7% over the past month. The weakness is consistent with the pressure on communication services names broadly — GOOGL and META have faced scrutiny around AI infrastructure costs and energy bills, while T has been sliding today on its own. That macro backdrop helps explain why short sellers built positions through the first half of May, even if they have since stepped back.
One data point worth watching is the divergence between short interest declining and price also declining. Shorts reducing positions typically supports the price; the fact that XLC is still falling suggests the selling is coming from long-side outflows rather than fresh bearish bets. ETF mechanics make this visible in the data — short interest in a sector ETF tends to track institutional hedging demand, and the drop from 6.9 million to 5 million shares short over three weeks is large enough to be deliberate rather than noise.
The next catalyst to watch is whether the major holdings — particularly GOOGL and META — offer any clarity on AI monetisation timelines, which would shift both the demand for protective hedges and the appetite for sector-level short positions.
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