You can show punctuation by associating sounds with them. For this, you use sounds as you write and then read back the sentence they’ve dictated. You can make up your own sounds. Mine are as follows:
I make a click of the tongue for a period. I say huh? for a question mark, and I make the sound “uh” for commas. An exclamation mark is a clap.
I did not say the sounds — I made the sound while reading the sentence.
So for example, take the sentence, My new dress has red, white, and yellow flowers. It’s beautiful! This would be, “My new dress has red uh, white uh, green uh, and yellow flowers (click of the tongue). It’s beautiful (clap)!
Very occasionally, an older child at Step 6, would have written a story where parentheses could be used. So I’d show them how to place them. For that, I’d hold a hand on each sides of my mouth and whisper what was written between where the marks would go. They would get that right away and be fascinated by it. Soon some would be finding ways to use quotes in their stories.
For Capitalization, you simply explain that everyone’s name and every sentence begins with a capital letter. (I dpn’t try to explain the definition of a proper name. but of course, I use caps for them, too.)