I personally know 3 people who run their own money ( <5 million ) who do this as their sole form of income.
Having said that, this isn't exactly easy. You need to know
1) if a stock is going into the index
2) when its going into the index
3) how much the index will buy
4) how much the index buy will affect the price of the stock
the first 3 are trivial for some index funds, though most have rules that allow them some leeway here so there aren't always sure things.
The 4th is where you make your money.
And it isn't like there aren't other's doing this, the article makes it seem much easier than it actually is.
If you play the game theory through you'd realize that if you knew the stock is going into the index then you are probably too late to profit from it as someone else will speculate the stock is going to go into the index the week before and already move the stock.
Funds can't really avoid this, and to be honest they don't really care to avoid it. It doesn't affect them at all, they are just supposed to mimic the index. Though you do start to get into a strange feedback loop whereby the index fund that is supposed to track the index starts to dictate how the index moves, we'll call this the "index inception" effect:)