There seems to be a lot of Bearishness out there. I can understand where it's coming from because one has to think that at some point the way the Fed is holding rates artificially low has to have negative ramifications. Why would I think that? Oh...maybe because artificially low interest rates cause the NASDAQ Bubble, and the Housing Bubble, and the Commodities Bubble. But I suppose Helicopter Janet doesn't care.
Anyway I looked at the PE Ratios. Small Caps don't seem overvalued. Here is a look at the S&P 600 Small Cap index since 2010. The current level is 23.20. From a six year historical perspective it seems right in the middle to me. In early 2010 it spiked to 32. I'm not sure why. Its probably due to some kind of anomaly coming off of the market crash. For a longer-term perspective we have the S&P 500 PE since 1954. The current level is 19.