Great chart, showing that the rubber band (I think of charts as stretched rubber bands) of S&P price is indeed pulled high, and taut. The higher one pulls a rubber band, the more force it enacts to go back to equilibrium...
It also validates me moving 10% more out of equities and into cash/cash equivalents earlier this year.

Remember that the valuation of the S&P matters only to the extent that it resembles your portfolio! It most definitely doesn't resemble mine, so I remain calm.

One caveat on my chart: the earnings are smoothed, as with the E10 CAPE but a bit smoother. The S&P 500 earnings before smoothing have really zoomed in the last few years, so the current earnings figure before cyclical adjustment is quite a lot higher than the smoothed line on my chart. To the extent that one expects current profits to remain at these elevated levels ("it's different this time", "permanently high plateau" etc), the gap is smaller.

My smoothed line has really turned upwards too because the unusually high profitability has been going on for some years now. Though by construction it turns up more slowly than the earnings in the current business cycle. For a sense of scale, in the median rolling year since 1960 my smoothed real earnings line rose inflation + 2.20%. It rose a whopping 5.33% in the last year. That recent rate *definitely* won't last because it absolutely dwarfs the rate of increase of revenues, so the slope of the smoothed real earnings line is definitely going to flatten out meaningfully at some point.

Jim