After stocks' hot start to 2012, is there room to rise?

— -- The best yearly start for stocks since 1998 is making it costly for investors to sit on the sidelines — but also stoking fears the market has run too far, too fast.

It's been a rip-roaring first quarter, with the Standard & Poor's 500 up 12.0% on top of a nearly as impressive 11.1% gain in the fourth quarter.

It's the kind of rally likely to further divide the bulls who think there's still upside left, and bears who think speculation is taking over. "We've had a nice run here," says Howard Silverblatt of S&P Capital IQ.

Some key takeaways for investors to keep in mind about the strong start to 2012 include:

•Big pullbacks don't necessarily follow a strong first quarter. History doesn't support the theory that a strong start to the year sets investors up for a quick smack down. If fact, the S&P 500 has risen 10% or more in the first quarter eight other times since 1945.

The market rose three-quarters of the time in the following quarter and gained 3.3% on average, says S&P's Sam Stovall. And the one other time the market rose 10% or more in both the fourth and first quarters, stocks gained 5% in the following second quarter.

•Investors are still largely skeptical of the rally. Unlike a late-stage rally where investors are piling on hoping not to get left behind, investors remain doubtful, says Ryan Detrick of Schaeffer's Investment Research.

Investors pulled $1.2 billion out of stock mutual funds in February just after taking out $423 million in January, says the Investment Company Institute.

•Perception vs. reality for first-quarter earnings. Investors expect another record quarter for corporate profits in the first quarter, but expectations are modest and falling, says Chris Johnson of JK Investment Group.

Analysts expect S&P 500 companies to report 0.8% quarterly earnings growth, down from the 4.5% growth they expected at the start of the year, says S&P Capital IQ. With the bar low, stocks have upside as long as earnings aren't horrific, and could even be a pleasant surprise, Johnson says.

•Fading fear over Europe's debt woes. Investors continue to price U.S. stocks higher on the growing belief Europe's problems won't severely hurt the U.S., says Richard Cripps of Stifel Nicolaus.

"People have not fully bought into this rally," Detrick says. "There's still price appreciation left."