Good morning. The tape is turning healthier, but leadership is selective and catalysts are close. Today’s issue looks at three moves that now need confirmation on the earnings tape: utilities on fund inflows, insurers on breadth, and Cloudflare on execution. Today’s market read The backdrop is improving, but stock selection still matters. 01. Market Direction: Improving. The short-term trend is getting healthier, but not everything is confirmed. 02. Market Participation: Fading. Fewer stocks are helping. 03. Strongest Sector: Healthcare. Investors are showing the most interest here right now.

Utilities inflows have outpaced price action into a tight reporting window. As flows rebuild in the Utilities Select Sector SPDR Fund, the next few weeks will show whether this is a durable turn or just a positioning bounce.

Through July 6, net creations are roughly 4.5 percent of shares outstanding while the fund is still down about 3 percent over the last 90 days and sits around 5 percent below its 52 week high. Price is slightly above the 200 day average near 44.75, which fits a market that is testing a turn rather than rewarding clear leadership.

What decides it from here is the macro and the regulator. Contained long yields would lower pressure on valuations, while clean visibility on rate cases and pricing power would shore up forward earnings and cash flows. If management teams affirm capital plans and customer affordability alongside allowed return assumptions, the recent inflows have a real shot to anchor.

Risks are straightforward. A reacceleration in long yields, tougher rate case outcomes, or tepid guidance on load growth and capital intensity could push the group back into wait and see mode. Watch the sector’s late July and early August reports, with names like Duke Energy slated for early August, for whether guidance and rate case updates validate the flows.

Breadth in property and casualty insurers has improved as reporting dates bunch on the calendar. Allstate, Travelers, Hanover, Cincinnati Financial, and Skyward Specialty all closed at fresh 52 week highs on July 7, a sign the market is rewarding underwriting discipline across more than one ticker. That sets up the next test of whether pricing and book quality match the charts for the property and casualty insurers.

The calendar is tight. Travelers opens the window in mid July, with peers stacked through late July. One month moves of roughly 13 to 36 percent say the tape is already crediting clean combined ratios and rate adequacy. The question now is whether premium growth, loss trends, and expense ratios show through in reported numbers and outlooks.

Watch the usual pressure points. Catastrophe losses and reinsurance costs can swing combined ratios quickly, and any reserve strengthening would challenge the idea that the books are as clean as the charts imply. If claim inflation or frequency resurfaces, momentum can fade fast.

What would confirm leadership is straightforward guidance on rate momentum versus loss cost trends, clarity on exposure to severe weather, and reserve comfort. Stronger capital positions help, but this leg up likely needs evidence that pricing power is durable into the second half.

The stock set up its own test by jumping 8.6 percent on July 7, clearing a 20 day range and finishing within roughly 3 percent of a 52 week high. That move puts the focus squarely on Cloudflare’s July 30 earnings call as a read on demand durability and operating discipline.

Under the hood, the May update showed revenue at 639.8 million, up 34 percent year over year, and free cash flow of 84.1 million for a 13 percent margin, helped by lower capital intensity. GAAP loss from operations was about 10 percent of revenue, so there is still work to do on the income statement even as cash generation improves.

Management leaned into the enterprise tilt, noting about 4,416 customers spending more than 100 thousand dollars and dollar based net retention at 118 percent. The second quarter guide calls for 664 to 665 million in revenue and 90 to 91 million in operating income, which frames the bar now that the stock is back near highs.

What matters next is the mix of growth and efficiency. Investors will likely focus on margins alongside large customer additions, dollar based net retention, and traction in newer security and developer products. Any wobble on operating leverage after the recent rally would make the setup feel early rather than proven.

Into late July, the tape is giving setups the benefit of the doubt but asking for proof. Watch the insurers’ mid month prints, the utilities window into early August, and Cloudflare on July 30 for whether leadership broadens or narrows.