Faye has moved out of the Bernardino Arms, but Tod spots her in costume at his studio. Convinced she is dressed for the "Waterloo" set, he sets off to track her down. He walks through a maze of new and ruined movie sets—an ocean liner, an Egyptian desert, a Western town, a jungle, a Paris street, a Roman courtyard, a pond of swans, and a Greek temple, among others. Tod sits down, looks around him, and thinks of Italian artists from the seventeenth and eighteenth centuries, painters of decay and mystery.
Tod climbs a hill and sees a dumping ground for old movie sets on the other side. He thinks of it as a "dream dump," a junkyard for imagination where all dreams eventually end up. Seeing and hearing cannon fire in the distance, he realizes he has finally found the set of "Waterloo." He follows some soldiers, who are wearing costumes he designed from a Victor Hugo novel, to the set. The cannon becomes louder and louder and Tod runs up to an overlook. On the plain below, Tod recognizes the battle of Mont St. Jean. A man rehearses his lines over and over again nearby. Tod watches the battle, which is being choreographed by directors. As the French army begins to charge Mont St. Jean, Tod watches as the directors effectively replay Napoleon's mistake: just as Napoleon failed to notice the fatal ditch in front of Mont St. Jean, the director of the French army cast fails to notice that the Mont St. Jean set is still being built by set designers as the cast charges towards it. The hill set collapses as the cast charges onto it, and the rest of the cast runs in a frenzy. Ambulances arrive to extract the cast from the scenery.
Tod hitches a ride with a studio worker and returns to his office. Several injured cast members ride with him, and they are happy about the possibility of injury compensation. When Tod gets back, Faye is waiting in his office and thanks him for his lecture on the dangers of prostitution he gave during Harry's funeral. She explains that she has moved into Homer's house on the arrangement that Homer will support her and invest in her until she becomes a star. Faye invites Tod to dinner at Homer's.
At dinner, Homer happily watches Faye while she talks about shopping. While Homer cleans up in the kitchen, Faye explains to Tod that Homer does all of the housework, brings her breakfast in bed, takes her shopping downtown, and buys her dinner and a movie. Homer and Tod sit out in the backyard while Faye changes her clothes for the movies. Tod bitterly thinks to himself that Faye has only chosen Homer because of his income and his house. Then, more charitably, he concedes that Homer is a man who would never laugh at Faye, and thus let her take herself seriously. Tod meanly asks Homer when he and Faye will be married. Homer looks pained, and then eagerly explains the business relationship he and Faye have agreed upon.
A "very American" woman appears in the yard and asks Homer and Tod if they ahve seen her son, Adore. She introduces herself as Maybelle Loomis, a neighbor and an "old settler," as she has lived in California for a full six years. She explains that her son is an attraction in Hollywood and would be a big star if it were not for "favoritism." Mrs. Loomis continues calling for her son, then asks Homer and Tod whom they follow "in the Search for Health, along the Road of Life." Mrs. Loomis herself follows a man named Dr. Pierce, who advises eating only raw foods. Eight-year-old Adore suddenly appears, dressed like a grown man. He bows to the men, then stands making grotesque faces at Homer. Mrs. Loomis catches her son and yanks his arm, apologizing for his behavior. Tod asks for Adore to sing for them, so the boy sings and moves his body seductively to "Mama Doan Wan' No Peas," a blues song with an undertone of sexual desire.
Mrs. Loomis and her son leave and Faye comes outside with a new dress on. Tod tries to excuse himself from the trip to the movies, but goes anyhow. Sitting next to Faye in the theater, he feels tortured by his continual desire to do violence to her. Tod wonders if he shares the "morbid apathy" he perceives in those people he likes to paint. He leaves quickly after the movie is over, vowing to stop chasing Faye. He puts away his drawings of her.
Tod is able to stay away from Faye for several months. In the meantime he hunts for new artistic subjects, going to various Hollywood churches—a weightlifting church, a fortune-telling church, a modern church, and others—to study the worshipers. He especially notices the discrepancy between the worshippers' shrunken, tired bodies and their frenetic minds. One night, Tod watches a man at the "Tabernacle of the Third Coming" angrily speaking a mixture of sinister warnings and lifestyle suggestions. Tod does not laugh at the man's strange rage, but the rest of the worshipers respond by jumping up and shouting.
The eerie landscape of discarded studio sets Tod traverses in Chapter 18 recalls his earlier description of the architecture of Pinyon Canyon. Seemingly all of history is represented and recreated somewhere on the movie lots. The replay of Napoleon's charge on Mont St. Jean is even more of a replay than the directors intended—Napoleon's failure to notice the ditch is reborn as the directors' failure to realize the set is still under construction—but Tod is the only person present who has enough knowledge of history to realize the irony. Indeed, the vast majority of the characters in The Day of the Locust live in a vacuum of the present: broader human history is largely unimportant or irrelevant to the novel itself, and many of its characters operate independently of any knowledge of their individual pasts or futures. Mrs. Loomis displays this shortsighted historical view in Chapter 19, characterizing herself as an "old settler" after only six years of residence in California.
The "dream dump" of old studio sets is probably the most famous image in The Day of the Locust. The dumping ground becomes an immediate symbol for the unrealized dreams of Hollywood. Tod's interest in this landscape comes largely from the painters he has been thinking of lately: the seventeenth- and eighteenth- century Italian artists of "Decay and Mystery." At the start of the novel, Tod identifies Goya and Daumier—renowned as painters of human subjects—as his masters. Tod's new inspirations—Rosa, Guardi, and Desiderio—are known as painters of setting, rather than the human form, painting natural landscapes of mountains and images of urban architecture. Tod is constantly interested in reading the emotional life of the Hollywood population through the architecture of movie lots, and architecture of the city more generally.
Adore, Mrs. Loomis' son, presents a further image of the grotesque. His appearance and mannerisms seem to be half the groomed and pressured role-playing his mother wants and half a typical eight-year-old's reaction to such odd upbringing. Adore's unruly, menacing faces are made even more unsettling because they appear on his plucked and manicured face, and on a small body that is dressed in a man's suit. Adore's role-playing is even more grotesque because of its crudeness and disturbing sexuality: his rendition of the blues song "Mama Doan Wan' No Peas" stays true to the original accent and sexuality. It is difficult to tell whether Adore truly understands the content and tone of his performance or is merely rehearsing a set of words and movements he has been taught.
The idea of religious search, which has been touched on in the novel but not fully explored to this point, reaches the forefront in Mrs. Loomis's remarks about her spiritual "Search for Health, along the Road of Life." Prompted by her comments, Tod decides to visit Hollywood churches and sketch the worshipers, who appear to be the same Midwesterners he has been interested in all along, those who have come to California to die. Rather than satirizing the silly gimmicks of each church, or pitying the worshipers for their bent and tired bodies, Tod focuses respectfully on the inarticulate, primal rage the worshippers all feel. West thus links spiritual searching with the frustration and desperation of the class of Hollywood people with whom Tod has concerned himself over the course of the novel.