Wanted; fair valued opportunities

What does it mean when only the most conservative high dividend slow growing companies on the NYSE are anywhere near fair value? All the growth stocks and the lower dividend stuff is richly valued.
What's propping up those prices...too much money chasing too little investment opportunity? Is it truly time to be in cash?  Should I spend all my money on banks, utilities and telecoms? Every bone in my body says "don't make wholesale changes, buy and hold, stop looking at the valuations, follow the earnings and dividends", but it's hard to look past the P/Es.  My DRIPs are buying more and more richly valued shares at the moment. I may have to change to that selective reinvestment strategy for a while.
How much cash would be a reasonable amount to hold, waiting for bargains?  My average dividend yield is about 3.5%.  That means that 10k earns me about $350 in dividends per year.  My average holding appreciates about 6.5 % per year. that means 10k appreciates by about $650 per year.  In order to feel good about holding cash, I'd need to put it to work;  could I get $85 per month in put premiums? maybe...would I be able to liquidate those positions in order to buy 10k worth of stock when an opportunity presents itself?  My experience is that puts often lose value first, then create value as the strike date approaches, or you get the stock. trading puts is a bunch of work, and there's some anxiety in it as well. Not my favorite use of idle hours, as it has to be done in the early morning.  Market hours are 0630 to 1330 around here, not hours I have to devote to investments.

Should I sell calls on overvalued shares?  I wonder if you can get a decent short term premium on the richly valued stuff...I should check it out.