The extent to which young children use, or should use sentence contexts as cues to word recognition is an unsettled issue. It is clear, on the one hand, that there are inherent limitations in this cue system to its successful use for this purpose (Groff, 1975). Also, the notion that beginning readers "have little else on which to rely" for word recognition except context cues, as offered by Karlin (1971, p. 145) has also been demonstrated as false. To the contrary, the research on word recognition suggests that these young children use letters as the main cues for word recognition from the time they first begin to learn to read (Groff, 1974).
Groff, P. (1979). Children's Recognition of Words in Isolation and in Context. Reading Horizons, 19 (2). Retrieved from http://scholarworks.wmich.edu/reading_horizons/vol19/iss2/8