This week we are going to be looking at the real estate sector. As you probably already know, this sector involves a variety of real estate related companies that are involved in such business as property management and commercial or residential development and rental. Real estate stocks have been strong for the last few years and we expect this to continue for the long term.

On the graph that we have provided, you can see the chart of the Dow Jones US Real Estate Index (DJUSRE). You can see that since mid-October 2005, these stocks have been in a strong upward trend and the index has been well above its 200-day moving average. The bottom of the chart shows the Williams %R indicator. The index has been firmly in the "overbought" area for the last few months, but as with the period before August 2005, this appears to be a sign of a strong trend instead of a coming reversal.

However, we should be cautious. While we believe that real estate is a good bet long term, you don't want to get caught in one of these corrections right when you put your money into these stocks. These significant corrections have happened three times in the last two years (one of which is indicated on the chart in red). Since it just had a major run-up in the last few days, you should wait to make sure the trend continues. If the index moves rises above 295 then we feel it should be ready for at least another 20-point increase in the next few months.

There are many real estate stocks out there to invest in; the index we talked about above has 83 different companies in it. Most people wouldn't recognize the names of many of these companies. One good thing about that is that it makes impartial comparison easier for investors. If you're trying to decide between Pepsi and Coke or Best Buy and Circuit City as an investment, you are more likely to pick the one that you personally prefer based on their product. However, if you're trying to decide between a few companies you've never heard of, you are going to be more careful about picking the one that seems like the best investment according to the numbers.

Another way you can invest in real estate is the iShares Dow Jones US Real Estate fund (symbol: IYR). This is an ETF that tracks the index we talked about in this article. There are also other real estate ETFs and mutual funds that invest in real estate.

Price Headley is the founder and chief analyst of BigTrends.com.