When the market breached the MA200: What happened next?

Recently, major stock market indices, such as the $Nasdaq Composite Index (.IXIC.US)$ , dipped below the 200-day moving average (MA200), sparking widespread attention.

Case 1: August 2024 Flash Crash
Many people still vividly remember the sharp plunge in stocks in August 2024. The initial decline started in mid-July when the CPI data surprisingly missed expectations, triggering recession concerns. Coupled with the high valuation of the overall market at that time, with many stocks, particularly in the chip and some Mega Cap sectors, showing signs of bubble, the market peaked and began to decline. The local peak of the Nasdaq Index appeared on July 11th at 18,671 points.
After the initial decline, the earnings season took off, with stocks like $Microsoft (MSFT.US)$ , $Alphabet-C (GOOG.US)$ , and $Tesla (TSLA.US)$ experiencing widespread declines of 5% to 6% after announcing their earnings. This was not a reflection of poor performance, but rather a result of their valuations being too high to justify further significant gains. Meanwhile, numerous Mega Cap stocks incurred excessive capital expenditures, amid high interest rates prevalent during that period. Consequently, the stock market witnessed repeated fluctuations between risk-on and risk-off phases towards the end of July.

Then, in early August, a major catalyst struck. Just as Europe and the U.S. were hesitant about cutting interest rates. The Bank of Japan surprisingly hiked rates violently, earning the title of the most contrarian central bank. But this triggered a reversal in the "yen-dollar" carry trade that had been building up since early 2023, leading to margin calls on leveraged positions, and a stampede of capital fleeing the market. The market hit bottom on August 5th in a bloody Monday, with the $CBOE Volatility S&P 500 Index (.VIX.US)$ spiking to 65(the fifth-highest reading in history), short covering quickly turned into upward momentum, and the market staged a violent rebound, recovering two-thirds of its losses within less than half a month.
During this plunge, the market briefly dipped below the MA200 on August 5th but quickly recovered. The cumulative maximum decline was 15%. It took less than three months, specifically by October 29th, for the index to recover to its pre-dip high after touching the MA200.
This episode proved fundamentally sound markets can rapidly rebound after flushing out excessive leverage. Investors holding unleveraged positions largely experienced temporary paper losses, with full recovery achievable within a fiscal quarter.

Case 2: The 2023 Slow Squeeze (August-October)
This was a relatively prolonged downturn before $NVIDIA (NVDA.US)$ 's stock price exploded. Compared to the July-August 2024 downturn, which lasted strictly for just over 20 days but saw huge declines, the August-October 2023 downturn, although not the deepest in terms of cumulative decline, lasted nearly three months, with repeated volatility between the upper and lower Bollinger Bands, causing significant damage. Many retail investors who entered the market in May and June 2023 were not spared.

The backdrop of this three-month-long oscillating downturn was high interest rates, with long-awaited rate cuts failing to materialize and inflation resurging, leading to a severe contraction in rate cut expectations and even the emergence of rate hike probabilities (during the September 15th FOMC meeting that year).
Due to its extended duration, spanning two earnings seasons (end of July and end of October), many stocks, such as Tesla, were overvalued before the first earnings season and began to decline after reporting earnings. By the end of October's earnings season, with rate cut expectations dashed and rate hike probabilities emerging, the market was in a state of panic, with almost all stock earnings being met with sell-offs upon announcement. If you experienced that period, you would know that the term "panic" is not an exaggeration.
Ultimately, the Nasdaq fell to 12,543, a cumulative decline of 15% from its pre-downturn high of 14,446. On October 26th, the index dipped below the MA200 and oscillated around this level for three days. With the release of a dovish tone during the last interest rate meeting of October, the market started to rebound in November. Coupled with the fact that almost all notable stocks, such as $Microsoft (MSFT.US)$ , $Amazon (AMZN.US)$ , $Meta Platforms (META.US)$ , $Alphabet-C (GOOG.US)$ , $NVIDIA (NVDA.US)$ , $Broadcom (AVGO.US)$ , $Taiwan Semiconductor (TSM.US)$ , $Salesforce (CRM.US)$ , $Apple (AAPL.US)$ , $Oracle (ORCL.US)$ , among others, had reached historically low valuations, this rebound was intense. The low point in late October also marked the only valuation bottom in the bull market that spanned from 2023 to 2024.
Subsequently, funds scrambled to accumulate positions, and some fundamentally strong stocks, notably Nvidia, soared from 400 to 960. Other chip stocks also followed suit. We've all witnessed the rest of the story, so I won't elaborate further.
A summary of this round of dipping below the MA200: The MA200 formed a strong support level without further declines. From dipping below the MA200 on October 26th to recovering to pre-dip highs on November 29th, it took one month and three days.