Excess Returns Again

Excess Returns are under or over-performance against a selected benchmark. For example, if after a year, the Dow Jones (I always use the Dow, but the S&P 500 is probably the better benchmark) is up 10% and I'm up 5%, my Excess Returns are -5%. Below, I've included a graph of my historical excess returns. The blue area is the daily rate, and the red bar represents my average for the whole period (Oct 1, 2008 to June 25, 2010)

My current excess rate is 19.84%, and I'm trying to figure out how much is too much. In the long run, I should only have returns at or near the Dow Jones. If I'm making more than the Dow, than it's only temporary and a correction might be coming. You can see in this chart that I peaked in at least two moments, at around 40% in June of 2009 and at 35% in April of 2010. I held the gains in both cases for less than two weeks. So the question I'm trying to answer this weekend is, how high is too high? If I get to 40% again, should I halve my positions or buy put options? Can I get higher than 40%? Is 30% a better limit? I don't want to bail out of stocks early (see Ford, Tata Motors, US Steel, Dr. Pepper, Leading Brands, Entravision Communications, etc;), but learning how to limit my losses seems like the long-term winning move.

If anyone know anything about this, please post a response and let me know. Thanks!