David Rosenberg, chief investment strategist at Gluskin Sheff & Associates Inc., warns that the record-setting stock rally is “overdone” and savvy investors should brace for a pullback.

The S&P 500 has risen 7.5 percent over the past six weeks largely on optimism surrounding Donald Trump's upcoming presidential term, but at this point, "the faith-based rally is overdone," Rosenberg recently told CNBC.

The bullish run "probably can get extended into the new year," but "we've just taken a very big leg up here, and levels of sentiment, levels of market positioning and levels of valuation do have me a bit worried that if we see any disappointment at all, it could lead to the sort of pullback we had last year," he said.

Rosenberg calls current valuation levels "extreme" and said that even if the most optimistic expected earnings scenario comes to pass, a drop in valuations back to historically normal levels would bring the S&P 500 back to 1,950 — 14 percent below Tuesday's close, CNBC.com explained.

Rosenberg advises investors to have "more cash on hand" for what he expects to be a volatile new year.

To be sure, U.S. stocks fell in volatile trading on Wednesday after the Federal Reserve raised interest rates by a quarter point and signaled hikes could come next year at a faster pace than some expected.

The Dow Jones industrial average closed about 120 points lower after dropping more than 150 points following the Fed's announcement, with Caterpillar, 3M and Boeing contributing the most losses.

The Fed's decision comes as President-elect Donald Trump, who will be sworn in next month, is seen cutting taxes and increasing spending on infrastructure. Central bank policymakers shifted their outlook to one of slightly faster growth and lower unemployment.

"The Fed ramped up the pace of rate hikes on a hope and a prayer of faster growth in 2017," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.

"Until Trump’s tax and spending plan actually gets implemented, it’s hard to justify the slight increase in the slope of rate hikes," he told Reuters.

(Newsmax wire services contributed to this report).

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