The Smallcap Newsletter QualityStocks Report 5/23/07

In similar fashion to yesterday's session, the major averages finished mixed, with the underperforming Nasdaq again attracting the bulk of buying interest amid another rotation into more growth-oriented names.

For a second straight session, the S&P 500 eclipsed its all-time closing high of 1527.46 intraday, but it again failed to sustain its momentum to finish there

With the S&P 500 closing at new seven-year highs a day earlier, coupled with several indices near record levels, it wasn't surprising to see the market looking tired Tuesday. After all, there was little in the way of market-moving news for the bulls to keep buying efforts intact

Another day with nothing scheduled on the economic calendar also left investors struggling to find catalysts to keep a bid in equities. Treasury Secretary Paulson said the housing slump is "largely contained" and that its correction is mostly "behind us." However, Richmond Fed President Lacker said in a CNBC interview that it's not clear that housing demand "has hit bottom" and that the "inventory overhang" will continue to be a "drag."

As evidenced by the Nasdaq's out-performance, Technology turned in the day's best performance; but it was among only three sectors in positive territory and it only closed up 0.2%. Energy was the day's biggest laggard as a downturn in oil prices prompted some widespread profit taking in the best performing sector of late.

At their lows, oil prices erased Monday's entire 2.1% advance, in sympathy with a nearly 4% sell-off in gas futures, before eventually settling down 2.0% just below $65/bbl.

Crude for July delivery, which is now the front-month contract following the expiration of the June contract, fell 2.0% to $65.51/bbl. Nonetheless, falling crude futures seem to do little investors psyche if prices at the pump remain at record levels.

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Universal Guardian Holdings, Inc announced that their Afghanistan subsidiary was awarded a third renewal of a $1.5 million, twelve (12) months contract to support Military Personnel Resources International by providing Interpreter Management Services for Military Personnel Resources Internationa

Universal Guardian's Ceo Michael Skellern, Universal Guardian's additionally stated last month that the company expect to generate more than $8 million dollars in Cobra StunLight(TM) sales by the end of FY 2007, due to new infomercial and commercial campaigns

Zanett Inc. announced its Q1 2007 services revenue, including reimbursed expenses, at $12 million up 12% from $10.7 million the same quarter a year ago. The company is an information technology (IT) company that provides customized, mission-critical IT solutions to Fortune 500 corporations, mid-market companies, and classified government agencies involved in Homeland Defense and Homeland Security.