Investing.com — Despite the decline last week, the experienced a notable post-election rally, largely driven by gains in technology-related companies. 

However, analysts at Wells Fargo (NYSE:) caution that beneath this surface-level optimism, the market may be vulnerable to a pullback.

Through December 17, the S&P 500 posted a modest gain of 0.38% month-to-date, in contrast to declines in other major indices. 

The dropped 3.12%, and the small-cap fell 4.06% during the same period. 

Wells Fargo attributes this divergence to weakening economic surprises, as measured by the Bloomberg U.S. Economic Surprise Index. 

The index, which gauges how economic data compares to consensus expectations, has trended downward since peaking in mid-November, now hovering just above zero.

“This is concerning,” Wells Fargo notes, “given the level of positive positioning that has taken place in equity markets since the elections.” 

They explain that investors appear overly focused on a potentially brighter future while ignoring the current disappointing data. 

Wells Fargo warns that this disconnect may soon need resolution.

Historically, markets can experience post-inauguration disillusionment as high expectations collide with the realities of policymaking, says the bank. 

With the S&P 500 nearing overbought territory, Wells Fargo advises investors to remain disciplined and ensure equity allocations align with recommended levels. 

“We think now would be a good time for disciplined investors to make sure that their portfolio allocations to equities are not above recommended allocations, especially with long-term interest rates offering a solid alternative,” the firm adds.

Despite the concerns, technical indicators show the S&P 500 remains in an uptrend. Wells Fargo highlights key support levels at the 50-day moving average (5920) and the 200-day moving average (5515), with resistance at the recent high of 6090.

Wells Fargo advises caution, concluding: the “post-election run leaves S&P vulnerable.”