Investing.com – Despite last week’s decline, the stock enjoyed a notable post-election rally, driven largely by gains in technology-related companies.

However, analysts are at Wells Fargo (NYSE:) warns that the market could be vulnerable to a decline under this superficial optimism.

Through December 17, the S&P 500 has posted a modest gain of 0.38% for the month so far, contrasting with declines in other major indexes.

The decline was 3.12%, and the small cap fell 4.06% over the same period.

Wells Fargo attributes this divergence to waning economic surprises, as measured by the Bloomberg US Economic Surprise Index.

The index, which measures how economic data compares to consensus expectations, has been trending downward since peaking in mid-November and is now just above zero.

“This is concerning,” notes Wells Fargo, “given the positive positioning that has occurred in equity markets since the election.”

They explain that investors were overly focused on a potentially better future while ignoring current disappointing data.

Wells Fargo warns that this discrepancy may need to be resolved soon.

Historically, markets can experience disillusionment after the inauguration as high expectations clash with the realities of policymaking, the bank said.

As the S&P 500 approaches overbought territory, Wells Fargo advises investors to remain disciplined and ensure stock allocations meet recommended levels.

“We believe now is a good time for disciplined investors to ensure their portfolio allocations to equities do not exceed recommended allocations, particularly as long-term interest rates provide a solid alternative,” the firm adds.

Despite the concerns, technical indicators show that 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: “Election surge leaves S&P vulnerable.”