The method is very simplified, it isn't as simple as that. However, a lot of the faults pointed out are due more to the over-simplification of the method, than to the method itself.
There's something fundamentally wrong with your strategy and that's that a great return on a small portion of your investment capital does not mean much at all. The idea is to put ALL your capital to work to beat inflation, stupid investments like Cds, etc, etc.
I agree, and that is simply the foundations of a beginners strategy. There is plenty of scope to build unto this while minimizing risk. Of head I would suggest that rather than just taking tiny 10% portfolio positions every now and then. A smart move that will still keep risk at a minimum is to identify several candidates for this strategy all at once and weigh them up in terms of risk/reward. And by this I don't mean you should make an educated guess on what the likely hood of the company picking up and growing profoundly over the coming months. That would be pure speculation. You would be better suited by assessing the companies fundamentals in full detail, from their income statements to management and investor sentiment before weighing them up. This way you can allocate much more of your funds, 50% would be reasonable, split between the chosen stocks at your calculated weighting. The more stocks you can find and the more accurate and confident you are in your weighting - the more patient you will be to see your profits and the more bullet proof your portfolio will be. Remember it is important to start with a large cash balance so returns are substantial.
The fatal flaw in your strategy is your assumption that you can consistently define a tradable pullback level in a sector that will provide a good return over time. But you can't. Looking at past price action - trading in the rear view mirror - is always easy. But at the hard right edge of a chart in real time, you have no way of knowing whether a 10% correction will turn into a 20% correction, leaving you underwater for years.
Maybe try this on for size for something "simple". 1. When volatility for an index hits a 52 week high and things are dropping badly, wait until volatility comes back down to the rolling annual average (let's just call it 200 day sma for simplicity) and once it touches that average: BUY BUY BUY 2. Once volatility for this index hits a 52 week low and everything seems peachy: SELL SELL SELL and get flat, wait for #1 again.