A Dead Ringer

South Korea's KOSPI Composite Index has been having a rough couple of sessions, which reinforces the recent weakness we have seen in the semiconductors, overall, since the KOSPI is essentially highly levered index to AI (or "SI," if you like) these days. 

But beyond looking at this weakness in a vacuum, the larger concern is when we put it into context of long-term sentiment cycle trends. 

The market cycle psychology stages, illustrated just below by WallStCheatSheet.com, is fairly well-known within the trading community.

As you can see, the euphoria stage marks the top. However, there is not an immediate crash after that. Instead, we see a complacent rally to a lower high before a true rollover (more analysis below the first chart).

And when we update the KOSPI's actively-traded country ETF (EWY) on the weekly timeframe, below, you can see the uncanny resemblance to the above cycles. 

The semiconductors as a sector are in the same boat, too, which is why we have repeatedly driven home the message to Members that the SMH has not made a new high since June 22nd (the KOSPI ETF last made a new high on June 18th).

Even if the bullish prognostications for a fourth quarter rally in equities come to fruition in some stocks and sectors, the likelihood of a semiconductor top in place seems more likely by the day, particularly given the complete and total lack of fear about a top actually materializing in a sector which has been an undisputed market leader far more often than not since March 2009.