I agree with you mostly, that there are spaces where active can make great bets. But this particular example isn't quite true. Passive Index funds are not automated 100% and have discretion on when/how closely they track the index. They DO have to try and track the index, but that doesn't mean they have to own every stock IN the index, nor does it mean they have to buy X stock tomorrow, regardless of price.

source: Any prospectus/annual report of a large index fund, such as VTI.