Heading into the trading week, we expected to see a flurry of economic releases that would have an outsized impact on the stock market this week.

[See: 4 Can’t-Miss Items for Investors to Watch Next Week]

Those data points are now rolling in, but the market is reacting with a shrug. You shouldn’t. These data points are reasonably impressive.

Consumers aren’t totally depressed
The economy starts and ends with consumer confidence. Without robust levels of consumer spending, companies will hold off on hiring and government tax receipts will stay depressed. That creates a vicious cycle that leads to further caution among consumers, so it’s heartening to see that the Conference Board’s monthly snapshot showed a rise back to 53.5 in August after hitting a five-month low in July. Economists thought this number would drop from July’s 51 to just 50.7. Of course, a reading of 53.5 offers little reason to cheer, as we need to see this number move up past 80 to consider the consumer to be truly confident, but the trend is surely important for investors. [IA article?]

Housing prices: it could have been worse
Even as the housing sector appears quite dead, I have previously noted a steady improvement in the monthly Case-Shiller housing price index, which had moved up +4.6% in May. I cautioned that a modest pullback was to be expected in light of recent weak housing data, but a sharp pullback would be poorly received. Well, the index showed a +4.2% gain, which was modestly ahead of forecasts.

In many regions, housing prices are remarkably cheap. But that’s not enough to entice potential buyers for fear that housing prices will fall further. If financially-strong consumers start to see that housing prices are sustaining these +4% to +5% increases, they are more likely to wade back in and buy homes. This has been a vicious cycle, but we may be on the cusp of a shift to a virtuous cycle. [Read: Pounce on this Sector’s Value Before it Disappears]

Manufacturing: still growing
Factory output in the Chicago area is starting to slow. The Chicago purchasing managers index (PMI) fell to 56.7% from 62.3% in July, which was largely in line with forecasts. Trouble is, we’re inching closer to the 50 mark, which would signal that the manufacturing economy is shifting from expansion to contraction. So it’s hard to read anything bullish into this number, though it’s also too soon to call this gauge as an outright bearish indicator. Next month’s reading will be crucial in terms of its impact on investor confidence.

More to come
Investors need to stay attuned to these readings. We’ll get the monthly auto and truck sales figures on Wednesday, and the all-important monthly employment report on Friday. As I noted last week, the market expects the unemployment rate to tick up from 9.5% in July to 9.6% in August. Any reading above that could prove troublesome, since trading volume will be so light (which can exaggerate market moves).

Action to Take –> These economic data points underscore the notion that we are on the knife’s edge right now. The economy is still growing, but barely. Notably, stock prices are already anticipating that we will head back into recession, so it’s unclear if the market will move much lower even if the coming economic data is gloomy. I tend to look at very weak economic reports — and any sell-off that ensues — as a buying opportunity if it pushes stocks with high levels of cash flow even lower.

In a previous article about Walmart (NYSE: WMT), I discussed the use of free-cash flow yield. In this market environment, you should focus on stocks that offer robust cash-flow yields, as Walmart does. You can conduct the free-cash flow test, as I discussed in that article, on virtually any investment you are assessing.

[Read: Act Now Before Walmart’s Undervalued Shares Take Off]