The P/E10 version of the P/E ratio is instructive in understanding how overvalued or undervalued the overall market is. Much has been written comparing the P/E10 effectiveness compared to the simple P/E ration. In short, simple P/E seems to lag market advances and declines. P/E10 appears to provide a better leading indicator.
Following is a very well written article describing P/E10, and where we are at today:
In summary, the overall market P/E10 is in the 93% percentile region right now.
For comparison, P/E10 was in the 95% percentile in 1929, 97% in 2007 and was even higher during the Tech Bubble of 1999/2000.
Just a heads-up everybody!