 According to Wikipedia ferrofluid is composed of nanoscale ferromagnetic particles in a carrier fluid. When you put a magnet near the fluid it forms all kinds of crazy spikey liquid shapes. The caption for this video doesn't say but I believe they have an electromagnet below and above the ferrofluid seen in the video. They move the magnets around to create the shapes. Additionally they seem to have the strength of the electromagnets connected to a clap on clap off device. Near the end the two presenters cap which causes the ferrofluid to move and stop. Weird looking stuff.
Check out the video of the spikey ferrofluid for yourself below or click over and view it on the host site. Source: Google Video | 
