The stock market is seeing abnormally large moves this earnings season - Goldman Sachs explains why, and how traders can capitalize

• Single-stock price fluctuations have been more extreme this earnings season than at any point in the past eight quarters, Goldman Sachs says.
• The firm attributes this to poor forecasting from Wall Street analysts, which has been driven by unpredictable macro developments.
• Goldman also offers four single-stock trades for the remainder of earnings season.

If you've noticed that stock prices have been swinging more than usual this earnings season, it's not just your imagination playing tricks on you.

The 252 companies in the S&P 500 that have reported so far have seen an average absolute move of 3.9%, according to data compiled by Goldman Sachs. That's well above the mean fluctuation for both the past eight quarters (3.2%) and the previous four (3.3%), the firm finds.

This is perhaps best explained by one unfortunate reality: earnings forecasts haven't been accurate, which opens up companies to the types of surprises that can whipsaw share prices.

But Goldman suggests its not entirely their fault. There are influential macro forces in play, making everyone's lives more difficult.

"This is a sign that the strong economic environment and accelerating inflation trends has reduced the earnings visibility for company management teams and covering analysts," Katherine Fogertey and the Goldman derivatives team wrote in a client note.

Even though big price swings can catch investors off-guard, they can also be a boon for stock-pickers that have made the right trades. Active managers who make their living by selecting single stocks are already off to a record-setting start in 2018, and this type of idiosyncratic market behavior can only help their cause.

But Goldman's assessment doesn't end there. Fogertey & Co. go as far as to make four single-stock recommendations to help traders make a killing over the rest of earnings season. All of the quotes below are attributable to the derivatives team at Goldman.

1. Buy Cisco (CSCO) August $42.50 calls - "We expect a relief rally as CSCO has underperformed the NDX by 14% over the past 3 months."
2. Buy Canadian Natural (CNQ) August $37 calls - The "company has executed well with strong volume growth in Horizon and Athabasca projects."
3. Buy Tapestry (TPR) August $47.50 calls - "Our analyst believes growth momentum at Coach and inflection at Kate Spade outweigh challenges at Stuart Weitzman."
4. Buy TripAdvisor (TRIP) $57.50 weekly puts expiring August 3 - Our "estimate for the quarter is $0.31, below consensus estimates of $0.39.

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