Below is a chart of the S&P 500’s price versus its trailing 12-month P/E ratio. As you can see, up until the March 1st high for the S&P, its P/E ratio was trending right along with it. Since then, however, we’ve seen P/E contraction, even though the index has gone on to make a new high. This means that earnings (the E in P/E) have outpaced price (the P in P/E) over the last couple of months. That’s a good thing, especially for anyone who was worried about valuations.