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At the top of the scale: the month defense was already priced in — February 2020

◦ Written under index methodology v1 (in effect until 15 Jul 2026). The current series is v2 — readings quoted here may differ from those shown today. See the methodology.

Article

The extreme

There are readings the archive almost never records — the kind of statistical anomaly that works almost like a physical limit. In February 2020, that is where the Cyclical/Non-Cyclical ratio came to rest — the thermometer that measures the appetite for sectors sensitive to growth. It was not the start of a rotation into defense. It was a state already accomplished. In numbers: the ratio closed the month more than three deviations from its own average, stretched at the top of the scale. In the same month, Utilities rose strongly against the broad market and Commodities in reais followed the move. The money was already entirely inside the defensive perimeter.

What happened next

The extreme did not call for a reversal; it called for confirmation. The intermarket aggregate barely moved — from 38.2 to 39.82, stuck in moderate risk_off — while underneath the rotation kept running hard. It was the calm of the summary number hiding a displacement already complete. When the global shock arrived the following month, it did not find a market deciding where to hide: it found a market that had already decided. The stretch to that near-limit was not the peak to be undone; it was the warning that defense was set up before it was needed.

What did not happen

An extreme like that seems to scream "reversal imminent": something so far from normal behavior ought to come back. That is not what the record showed. The ratio did not retreat at once — it held at the top, because measuring the extreme is not the same as marking the turning point. And the intermarket summary number, nearly frozen at 39.82, carried no alarm at all. Anyone who read only that one missed the entire month.

The honest verdict

A statistical extreme describes a state, not a calendar. The Cyclical/Non-Cyclical ratio, stretched at the extreme, said with precision where the capital already was — not when it would leave. The average lies by omission; it is the components that tell the story.

Continue reading: March 2020 was the bottom · The April 2020 turn · The intermarket reading, the map of where the money runs →

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Characters: Statistical anomaly