With no major economic or earnings news expected today, the focus of investors will be on the continuing melt down of the financial industry and its aftermath. We got news Sunday night, that Goldman Sachs (GS) and Morgan Stanley (MS), which now operate as investment banks, will become bank holding companies.

While both already have subsidiaries that will speed their entry into their new status, it probably is also very likely that they will be looking to purchase existing banks, especially now that those banks can be had for cheap.

Traders should look for which bank stocks, especially the regionals, are showing very heavy volume on Monday and possibly take positions. Washington Mutual (WM) was already being mentioned as an acquisition candidate over the past week and Morgan Stanley (MS) was in merger discussions with Wachovia (WB), although this might end with Morgan Stanley’s (MS) new status. So we might see some bullish actions in those stocks.

The new status of Goldman Sachs (GS) and Morgan Stanley (MS) is also a positive, so traders could look to take a few points in those shares.

Do trade with caution and take early profits.

Tags: Goldman Sachs  Morgan Stanley  Washington Mutual  Wachovia