Retail stocks rallied Wednesday after what appears to be the best holiday shopping season in six years.

Wednesday’s pop notwithstanding, it’s been an otherwise bleak month for retail stocks as a whole. The XRT, which tracks a basket of key retailers, is down more than 12 percent this month and on pace for its worst December ever.

But one market watcher said retail is poised to move higher.

“When you look at the weekly chart on the XRT, the retail ETF, it’s gotten right down to a very key support level — just below $38. It bounced off that today, and that was the low we saw in 2014, 2016 and 2017, so it’s a very key support level,” Matt Maley, equity strategist at Miller Tabak, said on Wednesday’s “Trading Nation.”

“Whenever you hit a key support level in any stock or any ETF and it’s very oversold it usually bounces strongly off that level at least on the first try, so I think this one-day bounce is going to last for at least several weeks,” he added.

Maley also noted that the ETF’s relative strength index — a momentum indicator that evaluates overbought and oversold conditions — is the most oversold it’s been since 2008, suggesting overall market sentiment is very negative.

That said, he did note that it remains to be seen if retail will be a long-term gainer, saying, “We’ll have to take another look as we move further into 2019.”

WalmartTargetRoss StoresDollar General and Best Buy were among the retail winners on Wednesday, all rising more than 5 percent.

Like Maley, Gina Sanchez, CEO of Chantico Global, believes retail could continue to move higher, but that overall economic conditions don’t look favorable for the sector longer term.

“I would say that there’s probably some technical support that’s going to support this [retail’s bounce], but the longer term is that we’re going into a slower economy for the next year and the markets are going to start to price that in, so it’s going to become a valuation play,” she said.

From a valuation standpoint, she believes investors might be better off picking up more defensive plays.

“I don’t think it [retail] is necessarily cheap enough to hold up against let’s say utilities or some of these other health-care plays we’ve seen,” Sanchez said.