They're overvalued. Next real support level for the SPX is 300 (450 if you are extremely optimistic). SPX at 300 is only 22 years worth of value, which, coincidentally, is just before Alan Greenspan started to work his magic at the Fed.
Yes, it does look overvalued. But the bigger issue is the muted future expectations of E. Even if PE doesn't revert further to historical levels, three factors will impede future earnings so that equity prices may drop: 1. Higher taxes on businesses and consumers 2. High debt loads on companies and consumers 3. Price competition from global oversupply The end of the borrow-and-spend economy means many years of sub-standard earnings as the economy restructures.