"I have noted that the market in Sweden is briefly mentioned from time to time - usually complimentary. My daughter has lived in Stockholm with her family for the last seven years and is well settled - I always enjoy my visits over there. When I was with them over Christmas there was plenty of snow but everything seemed to operate normally - I am always impressed by their apparently smooth running infrastructure. Sweden seems to be growing steadily and there are plenty of cranes around. I have benefited over the last twelve months from an investment in the iShares Inc MSCI Sweden Index Fund (EWD.NYA) but am wondering about more direct company investment. I am not very keen on mobile phone manufacturers or retailers in the present climate but think there must be good investment opportunities in mining and forestry - and possibly other sectors. I wonder whether you or fellow subscribers have any suggestions?"

Eoin Treacy's view Thank you for this interesting email. The Swedish stock market has been among the leaders in Europe over the last few years and the Swedish Krona has unwound almost its entire bear market decline against the US Dollar.

The Index has pulled back rather sharply over the last six weeks and has now almost completely reverted towards the mean represented by the 200-day MA. A clear upward dynamic will be required to confirm support in the region of 1100.

The Index has been led lower by H&M which is its largest weighting at over 10%. The share dropped below the 200-day MA in late December and the MA has now turned downwards. It broke its progression of higher major reaction lows three weeks ago and it will need to sustain a move above SEK230 to indicate a return to medium-term demand dominance.

Sweden is a well diversified economy and as you point out a number of mining and lumber related businesses are worthy of mention. However, these sectors have performed in line with their global counterparts and have rallied impressively over the last couple of years, so they are no longer cheap.

Boliden is a zinc / copper miner. It broke out of a yearlong range in October and rallied to an impressive SEK140 before losing momentum. It continues to revert towards its mean and a sustained move to new highs will be required to reassert the medium-term uptrend.

Atlas Copco produces mining equipment and accelerated higher in late 2010. It has since pulled back somewhat but continues to look susceptible to an additional consolidation of last year's gains.

Sandvik is a global engineering company which also has a connection to the mining industry. It is also in the process of correcting an overbought condition relative to the 200-day MA.

Svenska Cellulosa which is involved in the forestry and paper industries has been ranging with an upward bias since finding support near SEK85 in May. It is currently pulling back towards the rising 200-day MA and will need to find support above or in the region of SEK100 if it is to hold the almost yearlong progression of rising lows.

Holmen is also involved in timber and paper and broke out of out an 18-month base in September. It encountered resistance near SEK250 from late January and has pulled back towards the upper side of the previous range. An upward dynamic is now required to confirm support in this area.