First step,
If an aircraft that is in equilibrium has the CG moved rearward a nose up pitching moment will result. As long as the CG is in such a position that the aircraft still has positive static stability then when the airspeed decays to the point where the main wing stalls and loses lift, then the nose will drop.
The aerodynamic centre of the entire aircraft, the neutral point, is the point at which the pitching moment does not vary with the pitch incidence. The distance between the CG and the neutral point is the static margin. If this is positive, ie the CG is ahead of the neutral point, the aircraft has positive static longitudinal stability, and a disturbance in pitch will cause a corrective pitching moment.
With zero static margin there is no corrective pitching moment and if the CG moved behind the neutral point, negative static margin, then the aircraft would be unstable and a disturbance in pitch would result in an exacerbating pitching moment, and the aircraft would try to flip around and fly backwards, like throwing a dart with the feathered end first.
So it would seem that the aircraft had a rearward CG shift to cause a nose up pitching moment that could not be countered with the pitch authority available, however the CG was still ahead of the neutral point and still had positive static stability hence the aircraft dropping the nose at the stall and not going in tail first.
This is how we expect an aircraft to react, assuming the C.G. is within limits.
Not exactly. For an aircraft to be controllable and maintain a minimum level of stability the aft CG limit will be some way forward of the neutral point. So an aircraft might be out of CG limits, CG behind the aft limit but still ahead of the neutral point, and therefore still have some static margin and positive (albeit reduced) stability. Such a CG would however result in an incorrect stab trim setting and insufficient pitch authority to control the attitude. Pitch authority/trim and stability are two separate but related issues, and you can lose pitch authority before losing longitudinal stability.