The Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) is already up 29.3% this year, making it the second-best of the nine sector SPDR ETFs, trailing only the Health Care Select Sector SPDR (NYSEArca: XLV).

Over the past 90 days, XLY, the largest discretionary sector ETF by assets, has climbed 2.4% and currently trades pennies below its 52-week high of $61.75. XLY could soon make a new high, according to one technical analyst.

XLY “remains in good shape, with steady price and relative uptrends. The price chart has support from its 50-day exponential moving average. The relative chart, versus the S&P 500, has just turned up from lower support of a rising trend channel, drawn up from its February low,” wrote Tarquin Coe of the Coe Report.

XLY has surged 85.4% over the past three years and has experienced a minimal amount of noticeable pullbacks along the way. That indicates the ETF has remained solid in the face of numerous macro headwinds including two U.S. debt ceiling debates, sequestration and a spike in Treasury yields earlier this year.  [These Sector ETFs Should Work if Treasury Yields Rise Again]

XLY actually functions as an ideal rising rates play because the consumer discretionary sector is the best-performing group in rising rate environments.

Rising rates benefiting discretionary stocks and ETFs may run counter to conventional wisdom that higher borrowing costs will turn spendthrift consumers into frugal savers. However, stout consumer confidence data combined with rising rates can be a favorable scenario for discretionary names.