INDICATOR: May S&P/Case-Shiller Home Price Index/Conference Board Consumer Confidence

KEY DATA: 20-City Prices (Seasonally Adjusted): Up 0.9 percent; Prices May 2011-May 2012: Down 0.7/Consumer Confidence: up 3.2 points; Expectations: up 5.7 points

IN A NUTSHELL: “With prices now starting to rise across the country, fence-sitters will have to start making decisions and that could trigger a faster increase in home purchases.”

WHAT IT MEANS: Home prices have not only bottomed but have started to turn upward. May marked the fourth consecutive month that the S&P/Case-Shiller Home Price Index rose and the increases have been strong. The annual decline in home prices is shrinking and in a month or two, they could turn positive. Indeed, a roughly 0.6 percent rise in prices in June would create that outcome. The increases for the past three months have averaged 0.8 percent, so that is a real possibility. Looking across the nation, just about every metropolitan area posted an increase in home costs. Phoenix is once again rising, posting a double-digit increase from May 2011. On the other side is Atlanta, which is still off by double-digits but has posted solid price increases in the past few months.

In a separate report, the Conference Board’s Consumer Confidence Index rose, surprisingly, in July. With all that is happening, it was expected that households became even more depressed by events. Maybe they were suffering from heat stroke from all the hot weather when answering the questions as the increase was driven by a spike in expectations.

The outlook for both business conditions and jobs picked up nicely over the month. I have no idea what drove that improvement but I will take it. The rise in the hopes for the future came despite a belief that current conditions are weakening.

MARKETS AND FED POLICY IMPLICATIONS: Tuesday was a good day for economic data. Yes, June consumption was weak but the rise in wages and salaries was a major plus. The improvement in confidence could lead to households spending some of that income. And maybe most importantly, housing prices are now in an upward trend. Together, these indicators point to an economy that is moving forward. But this is a week where the Federal Reserve and the European Central Bank are meeting, which would be attention-getting by themselves. When you add the employment report on Friday, it only makes sense for investors to watch and wait.