The chart is saying Dow 20,000 is possible by year end or early 2017. At that point the market would definitely be overextended and vulnerable. It's already overbought now, but the current momentum is so strong that it might propel it to 20,000, barring any black swan events.
The bullish case is that the Fed's raising rates (and plans for more) signals they see a strong enough economy and stock market to withstand it, based on the expectations for upcoming tax cuts and infrastructure spending. Mnuchin said they plan to get the tax cut plan in place very early, in the first 3 months.
The Fed is loving this since as Rickards said, they've been dying to get some inflation going and be able to normalize interest rates, and now they'll have the chance to finally do it. This 'Trump plan' was actually already in the works under House Speaker Ryan's big spending plan that was announced last December.
Rickards said the Fed desperately needs to normalize rates so they'll have some ammo to fight the next crisis when it comes. If rates are still at/near zero they have almost no ammo (other than negative interest rates and more QE). Ideally they'd like to raise a total of 3% since historically the Fed believes it needs the ability to cut rates a total of 3% to effectively deal with a crisis.
Anyway, I wouldn't underestimate the market exuberance and near/mid term upside. After the party there will be a big hangover, but the party may have some months to go, barring any unexpected events.
