Definition of Skittish Market

What is a skittish market? What is the definition of the term skittish market?

First off, to help define this term, let's look to the dictionary for the definition of the word "skittish":

"Skittish" - apt to start or shy

In a "skittish market", investors are afraid to pull the trigger because they are nervous.

A "skittish market" normally takes place after some kind of a prolonged downturn. Investors have lost a great deal of money due to this downturn, and now they are afraid to pile back into the market because they are concerned that the markets could fall more.

Let's give you a hypothetical example of a "skittish market":

The DJIA has declined 20% due to worries of another recession hitting the United States. Recent economic data shows that the fears are likely misplaced, and the markets start to rally. Many investors, though, are still nervous about the current state of the market, and are a bit too nervous to pull the trigger on any new buys.

This would be a "skittish market".

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