This article concerns the locus of all locally constant SL(2, R)-valued cocycles that are uniformly hyperbolic, called the hyperbolic locus. Using the theory of semigroups of Möbius transformations we introduce a new locus in SL(2, R) N which allows us to study the complement of the hyperbolic locus. Our results answer a question of Avila, Bochi and Yoccoz, and Jacques and Short, while motivating a new line of investigation on the subject.