I don't have a child that age any more (mine are 10 and 13), but what I would suggest you do, since your grandson knows how to sound the words out, is simply let him practice. That is how they learn to recognize them quickly---practice.
If you have the list of 120 words that he is (I am guessing?) supposed to know 70 of, then type up a story using mostly those words. Think of all the Dick and Jane books we read way back when..... See Dick run. See Jane run. Dick and Jane can run. Run, Dick! Run, Jane! After your grandson reads that "short story" a few times, he will KNOW "run", don't you think?
So take a half hour and sit down at your computer with the list, write up some silly short sentences/stories for him, and print them out. Then ask him to read the stories to you. :)
hth
ETA: Not to stir the pot (I know reading can be a controversial subject)... but I followed the advice of one of your posters and googled "easy ways to learn sight words" and the first sight I clicked on was a discussion of how learning sight words too early and without phonectics/sounding out training, contributes (at least that is what they claimed to have seen studies showing) to dyslexia, because, supposedly it interrupts the learning of the brain on how to read (which should be left to right). It uses the "picture" side of the brain, which is a different area of the brain than we use when we are reading left to right. It was quite interesting, and if I had smaller kids I would research it further. We never used sight reading. I taught both my kids to read phonetically (sounding out) through "Teach Your Child to Read in 100 Easy Lessons" when they were 3 and 4 yrs old. So they were already reading fluently BEFORE they even started kindergarten. Having read that page, so glad that I did.
They knew all the sight words when they got to K5 because they had been using them while reading. It comes with practice, naturally. :)