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This from a New Scientist article that was released on Friday, their article is a commentary on a 3 paged document that appeared on arxiv.org. I read the NS article then the paper. Naturally I'm sceptical of anyone that makes stock market predictions. If the predictions become true that I'm curious to know if it was a fluke or a genuine prediction. I've read books about investing and trading, I'm also a mathematically inclined person, so I figure I could provide worthy criticism to this recent claim. In short: it is an interesting article that merits more attention but shouldn't be taken without criticism.
The paper doesn't really provide the maths of their technique, some graphs are produced with statements of prediction. The group predicted that the Shanghai index was in a bubble and due to burst soon: between July 10th and August 10th. The article was released on July 10th and the peak of the index came on August 4th. So it seems that their prediction was correct. 
Anyone hoping to exploit the model for profit should think twice. "If enough investors take action based on our predictions, the evolution of prices will probably be affected," says Zhou. No matter how good this new method of prediction turns out to be in the short term, the long term benefit may not be so good. If everyone sees a bubble approaching then how can investors prevent themselves from being caught in it? If many traders 'uninvest' then the index would go down. Then I have to ask: is it a real bubble? Price fluctuation is natural. This is a serious drop in percentage of the index but I think it is market sentiment and not a loss of real value to the companies that the index represents. This 'bust' may be short lived. Technical indicators tell you only about price fluctuations, they tell you nothing about the real value of a company. Add to that, no single technical indicator is 100% reliable, so you could load up on multiple technical indicators to analyze the markets; however, I'm not so fond of technical analysis as it makes things overly complicated. I think a fundamental approach (ala Warren Buffett) is the most reliable method. This method of analysis caught my eye because it seems accurate and two it analyzes self-organization in a system. The team behind this paper have numerous research articles about catastrophes and other crash-type occurrences in nature.
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