Economic data continue to be lackluster, and that’s why share prices are retreating. You can argue, however, that the current retrenchment in stocks is really just the consolidation or correction that the market’s been needing for a while. Regardless of how you call it, the reality at this time is that economic news isn’t a strong enough catalyst for investors to be buying stocks with any fervor.

However, as much as the economic analysis and news dominate the headlines, it’s important to follow what’s really happening at real companies in order to gauge the current state of things. I always follow a number of what I call “benchmark companies,” and their trading action helps define my overall stock-market view.

I always follow International Business Machines Corporation (IBM) (NYSE/IBM), which is a super large-cap, technology-services powerhouse. If business is good at IBM, then it’s generally healthy in the rest of the information-technology industry. This stock is trading just a few points below its all-time record price high, and looking at its chart, it seems very reasonable to conclude that it could handle a correction—especially considering how well it has done since last September. Yielding just under two percent, Street analysts are still increasing their earnings estimates for the company this year and next.

Another company that I like to keep an eye on is E. I. du Pont de Nemours and Company (NYSE/DD), which is always known as just DuPont. This $48.0-billion company has been a solid dividend payer (currently yielding about 3.2%), and I like following this business because it operates in agriculture, chemicals, communications, safety and protection, apparel and construction. It’s a well-managed company with the pulse of the industrial economy.

In its first quarter this year, DuPont’s revenues grew an impressive 18% over the comparable quarter to $10.0 billion, based on a nine-percent increase in volumes and an eight-percent increase in prices. Earnings per share grew to $1.52 from $1.24 during the quarter, and the company increased its 2011 earnings guidance to a range of between $3.65 and $3.85 per share from the previous range of $3.45 to $3.75 per share, excluding the impact of acquisitions.

The stock has been really solid, no doubt due to its higher dividend, and over the next five years, the company’s earnings are expected to grow about 10% annually.

Finally, I find it very useful to follow a railroad company, because whatever’s happening in the economy, the railroads see it first. CSX Corporation (NYSE/CSX) is a good one to follow because its business is located throughout the more heavily populated eastern U.S. and Canada. Business conditions at CSX are a good indicator for the rest of the economy.

This stock has been a powerhouse wealth creator (with the exception of the stock market’s collapse during the financial crisis), and the stock is trading just a few points below its record high. The company reported that it expects annual double-digit growth through 2015 and that the fundamentals for the industry couldn’t be better.

So, if IBM, DuPont and CSX were the economy, you would say that business is great. It makes me think that the current trading action in stocks is just the usual lull between earnings seasons. With corporations not saying much, investors tend to focus solely on the bad news. According to my benchmarks, these businesses are going full steam ahead.

There are a lot of good trades to be had in this market, but the vast majority consists of momentum opportunities. It’s difficult to find stocks right now that fit the buy-low/sell-high investment strategy, because the market’s moved so much so fast. If you’re a trader, you must be liking the action. Everything from mining stocks to banks to technology is moving in this market, especially if the earnings news beats the Street.

I am still saying that I’d be long the market in the current environment, but I feel a correction is coming sooner than later. If you’re a risk-capital speculator, you still can’t beat the mining business. The cash is just tumbling into these companies, because spot prices are holding up so strong. I also still like select U.S.-listed Chinese businesses. There’s just so much in the way of economies of scale with Chinese companies that I wouldn’t have a speculative portfolio without a few of these names. The domestic Chinese equity market has been in the doldrums for quite a while and I’m betting this is going to change this year.

I remain surprised by the price strength in equities. I attribute the performance partially to a lack of alternatives for global investors. Fourth-quarter numbers are good, but they’re not out of the ballpark. I actually anticipated more of a selloff in the broader market, because investors already bet on a solid fourth quarter. They bid up shares in anticipation of the good news. It’s possible the current action is just the leftover positive sentiment.

To keep an eye on this market, you’ll want to follow your benchmark stocks. I always follow UTX, CAT, HPQ, and DD as a matter of habit. I also think the transport sector is the key indicator for the broader market. The railroads are particularly important as a subsector.

The S&P 500 Index is trading just under 1,300, which is almost double the March low set in 2009. By any measure, this is an incredible recovery. From my perspective, 1,500 on this index represents a level in the broader market that you can say is an all-time high. This is about 15% higher from the current level. Frankly, I don’t think we’ll get there without a major correction.

The stock market is due for a correction, because share prices have been running strong for quite a while. This means that investors have to be as nimble as ever. For speculators, it definitely means that you’ll want to be able to cash out very quickly. The S&P 500 has been going up in almost a straight line since September. Eventually, it’s going to correct and I think there’s a real possibility it will do so with the same fervor it did last spring. This doesn’t mean that the game is over; in fact, I think the market needs a meaningful correction. It would be a healthy development.

Long-time readers know of my affinity for following a number of large-cap, benchmark stocks for the purposes of honing my own stock market view. Every quarter, I always write the same thing—that earnings season is the absolute best time to be researching the stock market and new investment opportunities. You get the latest, most up-to-date information available from a company, you get their operational forecasts for the future and you see how investors react to the news. All these data are available to help shape your own personal outlook for the future.

I always make a point to follow what’s happening with United Technologies Corporation (NYSE/UTX). This large-cap conglomerate operates in so many businesses that I think it’s actually a better barometer on the economy than General Electric Company (NYSE/GE). With a heavy presence in commercial and residential heating, fire protection, aviation and the installation of elevators, United Technologies has got its finger on pulse of the industrial economy.

The stock just hit a new 52-week high, and it is just a few points away from breaking its all-time record high set in 2007, which is a real accomplishment. Street analysts recently increased the company’s earnings expectations for the fourth quarter of 2010, the first quarter of 2011, and for all of this fiscal year. United Technologies reports on January 26; if you want to do yourself a favor, read the company’s financial report and its forecast for the future. What United Technologies says about its business is a great indicator for the rest of the domestic economy.

Another great benchmark company to follow remains Caterpillar Inc. (NYSE/CAT), which is the kind of business that gives you a good sense as to the health of the global economy. This Dow stock just hit a new all-time record high on the market and the shares are up some 50% just from this past August.

Caterpillar reports the day after United Technologies and the consensus is for an excellent quarter. Street analysts also expect the company to grow its earning significantly this year and they continue to increase their estimates on a regular basis. If you think about, it’s no wonder Caterpillar’s stock price is soaring; there’s solid demand for construction equipment in Asia and increasing demand on a global basis for the company’s mining equipment. Industrial companies seem to be the real engine of today’s stock market.

Finally, there’s Hewlett-Packard Company (NYSE/HPQ). If the domestic economy is doing well, then so is Hewlett-Packard. This company has got its fingers in a lot of business pies related to technology, both at the corporate and consumer level. That’s why it’s worth following, because it’s the ultimate benchmark in technology.

The company just got a major upgrade from a big investment bank. It’s a bet on the company’s upcoming fiscal first-quarter earnings and quite a bold move. The stock is well off its 52-week high set early last year, but has recently recovered quite a bit. If Hewlett-Packard is doing better on the stock market then you know the Main Street economy is getting better.

I find it tremendously helpful to review what these three companies say about their businesses. You can really develop your own market view just listening to what these benchmark companies report.