U.S. Steel broke out of a base Monday as steel stocks rallied broadly. (makspogonii-Fotolia/stock.adobe.com)

The major indexes held gains in afternoon trading Monday, as key leading stocks broke out of bases, including U.S. Steel (X) and Taiwan Semiconductor (TSM).

The Nasdaq composite and S&P 500 climbed 0.5% each while the Dow Jones industrial average rose 0.7%. All three traded near session highs. Small caps lagged, as the Russell 2000 pared gains and showed a 0.3% increase.

Volume was tracking lower on the NYSE and higher on the Nasdaq compared with the same time Friday.

Steel stocks rallied broadly on news that China is considering sweeping production cuts in steel and aluminum to combat smog. Shares of steel and other materials are among the so-called Trump trade, companies in infrastructure and manufacturing that stand to benefit from the president's protectionist and construction policies.

In the group, U.S. Steel broke out of a cup-without-handle base, clearing the 39.24 buy point in volume 50% more than usual. IBD's steel industry group is in the top 10 of 197 groups, rising sharply in the past couple of weeks. Steel alloys and mining stocks were lagging badly, however.

The fiber optics industry group led the market, up nearly 5%. Finisar (FNSR) is a group leader to watch as the stock rapidly forms the right side of a base. The group was one of the hottest last summer and is showing renewed strength.

Fabrinet (FN), a related company, broke out of a double-bottom base with a 45.30 buy point in heavy trading. The relative strength line has not made a new high, which detracts somewhat from an otherwise strong breakout. Fabrinet has a nearly perfect Composite Rating of 98.

Taiwan Semiconductor broke out of a flat base with a 31.71 buy point. An alternate entry at 31.55 also exists on the chart. Volume was about one-third above average. Despite several down weeks in heavy trading during the 16-week basing process, the chart shows signs of institutional accumulation.

Mobileye (MBLY) broke out of a cup-with-handle base in huge volume. The maker of auto-safety and self-driving car technology struck a partnership with Volkswagen (VLKAY) to develop autonomous cars.

Mobileye shares made a good run from February to August of last year as the development of self-driving vehicles got more serious. The stock had been basing since an Aug. 23 peak.

Regional banks were moving well. Seacoast Banking (SBCF), which serves Florida, broke out of a flat base. The stock is already extended from the 23.10 buy point. Western Alliance Bancorp (WAL) cleared the 50.82 buy point of a flat base and remains in buy range. Both stocks are part of IBD's Sector Leaders.

Software and other technology groups were among the top 12 in today's trading. Consumer stocks such as department stores, discount chains and shoemakers also led.

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The electronics sector has risen to No. 2 among 33 sectors. InterDigital broke out Monday.

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Market Higher As 4 Key Steel, Technology Stocks Top Buy Points - Investor's Business Daily