Technical analysis: Three Swedish firms will lead next year's rally.

• Key events of 2010
• BlackRock biggest foreign player in Stockholm

During 2010 stocks in Sweden climbed more than 20 percent as corporate earnings surged and the country’s economy rebounded surprisingly quickly from the recession.

And the rally is far from over, according to a technical analyst at Nordea Bank. In the next two quarter the Swedish benchmark OMX Stockholm 30 index may rise a further 9 percent.

“We see a rising triangle formation starting from April and based off this we expect the OMX to climb to 1,260 before the summer,” Jonas Olavi, a Stockholm-based technical analyst at Nordea, told Bloomberg News.

“Still, the market seems to be a bit overbought just now and could slide to around 1,120 in the coming weeks. We consider any dips to be a buying opportunity though.”

Companies expected to gain during the next year are those sensitive to economic growth and that have large exposure to the United States. President Barack Obama recently signed a deal to to extend tax cuts, expected to boost consumption and economic growth.

Jonas Olavi’s three hottest stock picks are Electrolux AB (the world’s second-biggest home appliance maker), Hexagon AB (the world’s biggest maker of measuring instruments) and Volvo AB (the world number two for heavy goods vehicles).

During the last 12 months the OMX Stockholm 30 index has climbed more than 21 percent, the second-biggest gainer among 24 developed markets tracked by Bloomberg.

"The Swedish economy is growing at a record rate", the Swedish Riksbank said two weeks ago as it hiked its most important key interest for the fourth time since July. The economy increased 6.9 percent in the third quarter, its fastest rate since the statistics agency began its quarterly measurements in 1970.