What will Happen to the Stock Markets here?

Starting back on December 29, 2014 the on-balance volume index on the S&P 500 topped at a closing price of 2090. Macro cycle signals turned down in July and the market just sits and waits.  So what should one key on at this juncture?

1)  Here we are today with the market trading at 2083, down 7 points from 12/29/14.

2) The basic economy continues to struggle with sub-par growth, the third quarter GDP estimate by the Atlanta Fed is sitting at a + 1.3 %.

3) Commodities, whether it be oil, copper, lumber, corn, or the inflation hedge, gold, are all in the tank.

4) The Fed is probably going to raise rates to 0.25 %, not really a big deal when rates should be at least 2.5 % except for brief periods (under one year) when the economy is in a recession. So this will not be a factor for now.

5) T-Bonds are trying to hold above the 153 area, a level we have cited before indicating that with the exception of paper assets, deflation is completely in charge.

Our guess is that stocks are going to do a slow drift lower, kind of a stealth decline which will not be really be realized until the broad indexes are down 20 percent from the highs, then the selling will pick up.

You might want to watch the XLF ETF (financials), it is trying to hold on in the expectation that banks will do better after the FED raises rates.  If this ETF turns lower, all bets will be off, because the safe-harbor trade will have vanished.