utomating such judgments, judgments which cannot be sharply defined.
A relatively recent mathemetical method, called "fuzzy logic," from which are derived "fuzzy systems," provides a means of quantifying and automating judgments of a sort that cannot be answered with a simple yes or no answer. The term fuzzy system was coined by mathematician Lofti Zadeh in 1965 (Negoita, 1981, p. 2). Fuzzy sets, from which fuzzy logic and fuzzy systems are derived, may be characterized as "a mathematical way to represent vagueness in everyday life" (Bezdek, 1994, p. 3). Before proceeding to a discussion of the uses of fuzzy logic and fuzzy systems in stock market analysis, it is necessary to briefly characterize how fuzzy systems operate.
Consider again the simple example of defining closeness to 7. A fuzzy-set approach would be to define all numbers in terms of some function that characterizes their degree of closeness. One such simple function would be one defines closeness in terms of a number's fractional distance from 7 in either direction, with a distance of zero meaning full membership in the closeness family, and a
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