This week was a pivotal point in the financial markets, and, as usual, the market turned on a crucial moment of panic and volatility. The bulls came out ahead.

Wednesday's panic was misguided -- foolish even -- especially to those of us following an emerging market such as optical networking. A panic over IBM Corp. (NYSE: IBM) and Intel Corp. (Nasdaq: INTC) earnings? It made no sense at all. Even Thursday's over-reliance on Microsoft's solid quarter seemed misguided. This market has been undergoing a tectonic shift in technology leadership -- and IBM, Intel, and Microsoft Corp. (Nasdaq: MSFT) are no longer the leaders. You're not supposed to be looking to Intel for eye-bulging growth and technology leadership anymore. It's got over $30 billion in revenues. And Big Blue? C'mon! Since when do we look at IBM to measure the health of the emerging technology sector?

Make no mistake about it -- there is some violent stuff going on out there. But this is a cleansing process, and it involves as much of a rotation as it does a correction. Skeptics say the technology markets are still overvalued. But true long-term technology investors should take this opportunity to reinforce their convictions in the future.

If we look at the signals set in this still-young earnings season, it's very obvious that the technology market has shifted from old-line PC and LAN-based economies (IBM, Intel, Microsoft), to a global network model. Commodity PC technology is out; massively scaleable networking is in. Lucent Technologies Inc. (NYSE: LU) thrived in the voice-based, circuit-switched world. It's failing to make the transition to the scaleable packet world, and it has fallen on its face. Juniper Networks Inc. (Nasdaq: JNPR), conversely, defines the emergence of scaleable packet-based networks, and it's become the new leader in the sector.

Why should we even expect Intel to be a technology bellwether? In the spirit of Andy Grove's paranoia, it's natural for new leaders to take over. The technology market is no longer defined by PCs, office suites, and chips -- it's defined by bandwidth and component-driven software. Optical components, open software, and network equipment will make the global network more scaleable.

And new leaders are stepping up. In software, BEA Systems Inc. (Nasdaq: BEAS) is consolidating its leadership in component-based Web software. Its stock chart has barely even hicupped in this dyspeptic market.

Caching software and hardware is an interesting place in the networked economy -- and the prices of the stocks have come down dramatically. There are only a handful of public companies involved: You can comfortably limit the list to Akamai Technologies Inc. (Nasdaq: AKAM), CacheFlow Inc. (Nasdaq: CFLO), Digital Island (Nasdaq: ISLD) (through its acquisition of Sandpiper), Inktomi Corp. (Nasdaq: INKT), and Network Appliance Inc. (Nasdaq: NTAP). Their performance during this crucial earnings period bears watching.

CacheFlow, of all the caching plays, still looks to be the most affordable -- it's attractive at a market capitalization under $5 billion. Akamai also sits in the $3 billion to $5 billion sweet spot, and seems to have sloughed off the excessive hype surrounding its IPO, making for a much more reasonable price. As individual stocks, they are all risky. But as a group, this category of caching and network storage devices is going to represent a huge piece of the global network, and you must own a piece of it.

Networking gear and components are still major cogs of growth in the global network, and the new leaders have become apparent: Nortel Networks Corp. (NYSE/Toronto: NT) and Cisco Systems Inc. (Nasdaq: CSCO) are dukeing it out on top; while the emerging crop of next-generation companies claw at each other underneath: Ciena Corp. (Nasdaq: CIEN), Juniper, Redback Networks Inc. (Nasdaq: RBAK), and Sycamore Networks Inc. (Nasdaq: SCMR) are likely to move higher as a group, though some of the individual companies risk falling on their face if they miss a quarter. All of these stocks were frighteningly expensive one month ago, but they look more reasonable today. Throw in some components plays like JDS Uniphase Inc. (Nasdaq: JDSU) and New Focus Inc. (Nasdaq: NUFO), and you've pretty much covered the entire emerging optical networking sector, growth of which has just started to accelerate.

Corvis Corp. (Nasdaq: CORV) is also considered a leader in the optical market, but there's no reason to consider the stock until the insider selling window is open -- insiders own hundreds of millions of shares of the stock, and they will control the trading game when they are able to sell. ONI Systems Inc. (Nasdaq: ONIS) also needs to settle outside its insider trading window, which begins opening on a staggered basis next month.

The climate has changed. The growth has not disappeared -- it's simply migrated to a new place on the network.

-- R. Scott Raynovich, executive editor, Light Reading http://www.lightreading.com

(Disclosure: Unless noted, Raynovich does not hold positions in any of the stocks mentioned in this column.)