Apple (AAPL) lost $60Bn last night.

That's two Tesla's, two Yahoos, 3 Twitters, 8 GoPros, and 2/3 of a Boeing, who, on the other hand, had great earnings.  Not that AAPL didn't have great earnings – the company made $10.6Bn, which is roughly 5% of the earnings of the S&P 500, which means AAPL is out-earning the average S&P company by 50 times yet it's only outpacing the S&P this year by 16% – or it was yesterday, today it's only about 6% over the other 499 stocks in the index, which include 100 energy companies selling $50 oil and 50 mining companies selling $1,000 gold.  

So, if AAPL is overvalued, what does that say about the rest of the S&P, which has gained 40% since Jan 2013, a lot of it on the back of AAPL's incredible income?  And that's nothing compared to the Nasdaq, where AAPL makes up 15% of the indexes value.  Since AAPL has gone up from $50 to $130 in 2.5 years, that's + 160% and 15% of that is 24% of the 60% the Nasdaq has popped is directly related to one company – Apple.  

As you can see from this BAC chart, we are conservatively 8% over the norm for S&P valuations and, when you look at the Shiller p/e ratio, which takes a 10-year view of “normal,” you can see that we are 61% ahead of where we should be.  I'm not as extreme as Shiller but I think a nice, 10% correction (back to 1,900) would be very healthy for this market.  

Fortunately, in yesterday's Live Trading Webinar, I stressed the need for our SQQQ hedge, where we have 75 of the Ultra-Short Nasdaq (SQQQ) Jan $75 calls in our Short-Term Portfolio.  As of yesterday's close, they were priced at $2.80 and today they should make a nice hedge against AAPL's earnings disappointment and we'll likely reduce back to 50 covered calls once the Nasdaq does find a floor.  

I already tweeted out my thoughts on AAPL this morning (we're long at $120) and we had plenty of discussion in our Live Member Chat Room – as we should when the World's Most Important Consumer Company reports it's earnings.  The short story is, if this (the chart on the right) is not a company you want to own for $680Bn(today's discount), then I really have better things to do than convince you.  The WSJ unintentionally summed it up with this idiotic headline: