David Ryan’s Ants Indicator: How Institutions Drive Big Stock Winners

Deepvue
Deepvue

April 27, 2024

7 min read
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What Makes Stocks Keep Going Higher?

Institutional accumulation is the driving force behind stocks that turn into big winners. Their massive buying power can push a stock higher over weeks or even months as they accumulate large positions over time.

But why do some stocks stall after a quick 15-20% gain, while others continue climbing, to then form new bases, and break out again?

David Ryan asked himself this very question when developing the Ants Indicator. He wanted to pinpoint the characteristics of stocks that attract strong institutional demand—the kind of demand that fuels long-term price appreciation.

Big money managers, such as mutual funds, hedge funds, and pension funds, don’t buy stocks the same way individual investors do. They manage billions of dollars, so they can’t simply buy their entire position in one day.

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Instead, institutions accumulate shares over time, creating consistent demand which pushes prices higher.

Who Is David Ryan?

David Ryan is a highly respected investor, trader, and market researcher best known for his work at William O’Neil & Company and Investor’s Business Daily (IBD). His deep understanding of stock market behavior and institutional accumulation helped him develop strategies that identify super-performance stocks—companies with the potential for massive gains.

Ryan gained widespread recognition by winning the U.S. Investing Championship three years in a row—in 1985, 1986, and 1987. Each year, he achieved triple-digit gains, and his total return over the three years was an astounding 1,379%.

While studying top-performing stocks, Ryan noticed that some stocks kept climbing even after appearing extended, while others stalled out. Through research, he found that stocks with strong institutional accumulation—where large funds consistently buy shares over time—were the ones that continued higher.

This led to the development of the Ants Indicator, which helps traders spot these high-potential stocks early.

The CANSLIM style of trading blends fundamentals in addition to technical analysis. Any stock traded with this methodology should have growing earnings and sales, in addition to supportive price action.

What is the Ants Indicator?

The Ants Indicator is a technical signal to identify stocks under strong institutional accumulation. It appears when a stock experiences a surge in both price and volume over a short period—signaling that big money investors, like mutual funds and hedge funds, are aggressively buying shares.

The Ants Indicator appears when a stock meets all three of the following conditions within the past 15 trading days:

  • 20-25% increase in price
  • 20-25% increase in volume
  • 12 out of the past 15 days are up

Institutions can’t buy their full position in a stock in just one or two days. They manage billions of dollars, so if they were to buy too aggressively, they would push the stock price up too quickly and hurt their own cost basis. Instead, they scale into positions over days or even weeks.

This steady accumulation creates persistent buying pressure, which drives the stock higher while forming distinct price patterns.

Why is it called the Ants Indicator?

David Ryan originally marked each price bar that met the Ants criteria with a small dot at the top. As these dots began stacking up on the chart, they resembled a trail of ants marching along the price bars—hence the name Ants Indicator.

Why Stocks With Ants Signal Top Performers?

Stocks that trigger David Ryan’s Ants Indicator often go on to become top-performing stocks. When institutional buyers step in they scale into positions over weeks or months, creating strong and sustained demand.

When the Ants Indicator appears on a chart, it confirms three key factors that drive massive stock gains:

  • Sustained strength – A stock that closes higher on 12 out of 15 days shows consistent demand.
  • Explosive price action – A rapid 20-25% increase in price in a short period signals strong momentum.
  • Institutional accumulation – A simultaneous surge in volume indicates that big funds are buying, which supports the price move.

As the company continues to post exceptional earnings and sales, institutions will continue accumulating shares. This steady accumulation creates persistent buying pressure, which drives the stock higher

Ants Indicator Case Studies

Example 1: UBER

Symbol: UBER
Company:
Uber Technologies
Year: 2013

ants indicator

UBER showed a huge price advance off its lows and broke out of a traditional base. When the Ants indicator appeared on the chart, it signaled that this stock was a potential super performer.

Following a consolidation in price, a new base evolved. Within the next two months, the price tightened and provided a tradable pivot.

Example 2: MSTR

Symbol: MSTR
Company:
Micro Strategy
Year: 2023-2024

ants indicator

After MSTR broke out of a traditional base, the Ants indicator appeared. Notice how it took a couple of weeks for the price to consolidate, tighten, and then provide another tradable range.

Remember the Ants indicator was created by David to spot potential super performance stocks that have the potential to double after Ants show on the charts.

More tradable areas developed over time as the stock saw tight price action. We see the Ants indicator appear after a move up and are waiting for an area to manage risk against.

Example 3: HOOD

Symbol: HOOD
Company:
Robinhood Markets
Year: 2023-2024

David Ryan's Ants Indicator: How Institutions Drive Big Stock Winners

Off the bottom near its all-time lows, the Ants Indicator signaled institutional accumulation in HOOD and then a tight base formed a new tradeable range. Again Ants signaled more accumulation as it broke out into new 52-week highs.

How to Find Stocks With the Ants Indicator in Deepvue

Deepvue offers multiple ways to find stocks that display the Ants criteria.

Adding the Ants Indicator to Stock Charts

You can add the Ants Indicator in Deepvue using the Technical Patterns tool.

Open the indicator settings – Search “DV” to see all Deepvue’s custom indicators and select “Technical Patterns.”

David Ryan's Ants Indicator: How Institutions Drive Big Stock Winners

In the indicator settings, select Ants and uncheck all other unwanted indicators.

David Ryan's Ants Indicator: How Institutions Drive Big Stock Winners

Customize how the indicator appears by adjusting the shape, color, and placement on the chart in the Style tab.

David Ryan's Ants Indicator: How Institutions Drive Big Stock Winners

Screening for Stocks with Ants

Find stocks with the Ants criteria by adding it to any of your screens.

David Ryan's Ants Indicator: How Institutions Drive Big Stock Winners
Add This Screener to Your Deepvue Account: Link

When editing your screener, you can simply type ants into the search bar. Navigate to the Technical Patterns and click “yes” once Ants is selected.

Combine the Ants Technical Pattern with your favorite fundamental or liquidity screens.

Key Takeaway

Large funds like mutual funds and hedge funds don’t buy stocks in one day – They accumulate shares over time, creating consistent demand that pushes prices higher. Stocks that attract strong institutional buying often form new bases and break out multiple times, leading to long-term price appreciation.

The Ants Indicator appears when a stock shows:

  • 20-25% increase in price
  • 20-25% increase in volume
  • 12 out of the past 15 days closed higher

This combination signals big money is flowing in, increasing the likelihood of continued price gains.

The Ants Indicator is a powerful tool for spotting potential super-performing stocks. When it appears on a chart, it signals heavy institutional accumulation, increasing the chances of big future gains.

Frequently asked questions

The Ants Indicator is a technical signal that helps traders spot stocks under strong institutional accumulation. It appears when a stock gains 20-25% in price and volume within 15 days, with 12 of those days closing higher. This signals that big investors, like hedge funds and mutual funds, are steadily buying shares, which can drive prices even higher.

Large investors manage billions of dollars, so they can’t buy all their shares in one day. Instead, they spread out their purchases over days or weeks to avoid driving prices up too quickly. This steady buying pressure creates long-term demand, helping the stock continue its climb.

Stocks showing the Ants Indicator have three key factors driving their momentum: sustained strength (12 out of 15 days closing higher), explosive price action (20-25% price gains), and institutional accumulation (high trading volume). These elements signal strong demand, which can push prices even higher.

You can identify stocks meeting the Ants criteria using charting tools like Deepvue. Simply add the Ants Indicator under the “Technical Patterns” section. You can also screen for these stocks by searching “Ants” in Deepvue’s screener.

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