Will sleeps for one hour before he wakes up, noticing immediately that Jim's lightning rod has been removed. Will senses something outside, and goes to look. He and Jim both open their windows at the same time and both see a balloon above them. They realize that the balloon is on a mission to find them, and they see the Dust Witch inside the basket. The boys realize that the Witch, though made of wax, is alive, and, although she is blind, she can sense people, feeling out their souls. She paints a huge silver line on Jim's house and leaves. Will climbs the clothesline pole over to Jim, and the boys go out on the roof and discover the mark. Will quickly grabs a hose and the boys wash off the line. He thinks that he would like to stop the Witch for good, so that their enemies at the carnival will have no way of knowing who they are. Jim feels bad for taking down the lightning rod, but Will is hopeful.
The boys clean off the roof and then go back to their bedrooms. Will comes up with a plan. He takes his Boy Scout archery set and then tries to call the Witch back. He knows that, although she cannot read thoughts, she senses excitement and feelings. Will starts directing his thoughts towards the Witch, telling her that they tricked her. He realizes that she is coming and then decides he must make her follow him to a different house. He runs to an old, abandoned house, with the Witch following him, and goes up to the roof. The Witch approaches him but then the wind blows the balloon away a bit, and Will fears that she has sensed his plan. Will tricks the Witch by standing with his back to the balloon and tempting her to attack him. Finally she comes, and at the last moment he spins and grabs his bow. As he pulls back the arrow, the bow splits in half. Will throws his arrow at the balloon and then grabs onto the basket. The arrow makes a tiny slice and air starts leaving the balloon. Will drops from the basket, slides off the roof, and is saved from a terrible fall by a tree. He sits in the tree and watches the rip in the balloon widen and the witch shoot off out of control.
Nothing else happens that night.
It rains all morning, and Miss Foley is the only one who hears the carousel music and goes to the carnival. Jim tells Will of a strange dream he had that mirrored Will's adventure from the night before, but Will cannot tell Jim what happened because they see a little girl crying. The boys go talk to the girl, although Jim is afraid of what they might find. The little girl is petrified, and begs them to help. Will and Jim realize who it is, but tell the girl to stay where she is until they make sure. They go to Miss Foley's house and when she is not there, they are sure that the little girl must be their teacher. They hear the carousel music go backwards and know they the machine is fixed. The boys go to get the little girl but stop when they hear music and realize the carnival is staging a parade through town. They hide as it passes by and when they look for the little girl she is gone.
Will and Jim have begun to fight back against the carnival. Their only advantage is that their enemies do not know who they are, and Will stopped the Witch, who was the only one who could find them. His plan involves using the Witch's abilities against her, tricking her into thinking that he was giving himself away when in reality he was setting her up all along. This success provides Will with some hope, because not only did they stop the Witch from marking Jim's house, but he stopped her from doing it again in the future.
Will has proven himself several times so far in the book, and the daring episode with the Witch demonstrates that he is able to act on his own, without Jim. Taking the initiative in the battle with the Witch was smart but also something that Will would not normally have done. Their circumstances have brought about a change in Will, and he shows that he is not very different from Jim; there is a part of him that favors action. But while Will has no doubt that they are in grave danger and that action must be taken, Jim is still blinded by his desire to ride the merry-go-round.
The boys are not out of trouble, and the carnival does not seem to be slowing down. Miss Foley is turned into a little girl. From talking to her, the boys realize both that the carnival is terrible and that they are the only ones who know. No one will listen to Miss Foley. It is at this point that Will and Jim realize how alone they are in their battle. They must face an evil force that destroys people's lives so completely that no one suspects them of anything. When the parade comes, the boys understand that their victory the night before was short-lived. Their enemies are coming for them, and they have no choice now but to hide. Even worse, the little girl is gone after the parade passes, likely snatched up by the enemy. The carnival leaves no witnesses or evidence, and Jim and Will are the only threat to its survival. They understand that nothing can keep them safe but their own abilities. From the beginning, the carnival has forced the boys to act differently from most thirteen-year-olds. Now they must grow up in a hurry. They have to face a more powerful enemy with only themselves to rely upon, and that is far beyond the average adventure that children seek.