The following are extracts from the Fountas Blog post. You may read the article here.
The goal for the reader is accuracy using all sources of information simultaneously. And that includes processing each letter in words from left to right. If a reader says “pony” for “horse” because of information from the pictures, that tells the teacher that the reader is using meaning information from the pictures, as well as the structure of the language, but is neglecting to use the visual information of the print. His response is partially correct, but the teacher needs to guide him to stop and work for accuracy.
"Try that again, and be sure what you read looks right and makes sense", or "Check the letters to be sure you are right."
The goal is for the child to stop or monitor, look more closely at the word and think about what would make sense and fit with the sequence of letters.
The bottom line is that a young reader must use everything he knows to move through a written text, to read it accurately and understand it. Multiple sources of information are combined in a complex and orchestrated way. The development of the child's ability to use all sources of information will take time and skillful teaching. It is impossible to boil down this process to something as simplistic as “don't think, just sound it out.”
