A system that enables targeting of an instrument placed within a drill bushing aligns the axis of a drill bushing with the axis of a transverse hole in an intramedullary nail. The system includes a probe having an elongated member with a distal end, a magnet that is polarized along its longitudinal axis that is mounted perpendicularly to the distal end of the elongated member; and a processor executing programmed instructions to determine a position and orientation of the magnetic sensor array with respect to the targeting magnet.