Would you pay $140,000 for a home that you could have built for $100,000? No. The $140,000 home is overpriced by 40%. THAT is the q ratio. The price of that home has to drift downward toward $100,000.
Would you pay $60,000 for a home you could have built for $100,000. No. The $60,000 is underpriced by 40%.
CAPE is an adjustment added to the PE ratio. When stocks have a price-to-earnings ratio of more than 15, they are historically overpriced. Things being generally equal, why pay $20 for a share that earns me a dollar, when I could pay $10 for a similar stock that earns me a dollar? So, PE below 12 or so is good (in the general market) while 18 and above is a GTFO of this market signal.