Michael Ashbaugh, editor of The Marketwatch Technical Indicator, considers the market's recent move a legitimate breakout. He explains, "Each of the major U.S. benchmarks -- the Dow, the S&P 500, and the Nasdaq -- has broken sharply to multi-year highs, and in the process, notched consecutive closes above its 20-day bands."

Further, he adds, each major U.S. benchmark cleared its June high. He states, "That means technically speaking, the latest rally carried the earmarks of a valid breakout. As the major U.S. benchmarks extend higher, the potential upside from current levels is still significant."

Meanwhile, as to specific market sector, he notes that "We have chosen to highlight some names that are well positioned technically. These are intended as radar screen names -- sectors or stocks positioned to move near term."

After months of lagging, he now notes that the computer hardware index has "come to life" this month. With recent gains, he points out, the group has staged a slight break to six-year highs. On a sustained breakout, he suggests that the group's next resistance comes in about 11.5% above current levels -- an area that matches the January 2001 peak.

According to the technician, four names below are driving the group's strength: Research In Motion (NASDAQ: RIMM), Apple Inc. (NASDAQ: AAPL), Dell Inc. (NASDAQ: DELL) and IBM Corp. (NYSE: IBM).

He adds, "Similarly, the networking index remains among the stronger technology groups along with the internet sector. The group has established a steep four-month uptrend, notching three-year highs."

Ashbaugh continues, "And like the Nasdaq, the networkers have recently found support around the June high, exhibiting relative strength versus the broad markets."

Within the networking group, he sees Cisco Systems (NASDAQ: CSCO) as well positioned, noting, "The stock is another large-cap technology name coming to life." He points out that CSCO has "notched new highs, edging atop a well-defined six-year range top."