You need to teach her phrasing (chunking).  Usually, teachers will teach students how to slash words, thus grouping them together.  You need to explain to your child that people naturally group phrases together.  Here are the basic rules for phrasing:

1.  Slash after any punctuation
2. Slash between a noun and verb
3. Slash before a preposition

You double slash after a period or ending punctuation mark.

Granted, as a teacher I would explain this in a simple way and maybe print out some big sentence and physically cut the words out that are groups.  This is a great visual.

- The Academy Learning Center Teacher
  Home of the hybrid homeschool for the gifted

Sounds like your child is doing great.
Sit side by side and read together. You can dictate pace and emphasis by touching a syllable, repeating something, etc.
But don't focus on technique. Focus on the story, sounds, rhymes, the fun and content of what you are reading.

If your student is still using their finger to point as her to, "read it with your eyes, not your finger." Other prompts are, "make it sound like talking", "read it all fast", and you should model this for her as well.

Is she reading the words as blends because she does not know a lot of sight words cold? If so, you may want to play some games with her to boost up her sight word recognition. You may want to also have her read easier material as this is an indicator that the material is too difficult.