Matt awakens back at the cottage and tries to tell his father what happened to him, but Adam thinks his son was just sleepwalking. At school, Jimmo has become very good at mathematics and has obviously joined ""The Happy Ones."" Dai explains to Matt that he was protecting him from the stones the night before. He suggests that the circle within the stones is a maze with the treasure of knowledge at its center. Dai is protected from the stones' power by an amulet with a serpent on it. In the meantime, Adam is told by Hendrick that the stones align in space with a black hole, which he discovered--Hendrick's Supernova.

Kevin and his father Dr. Lyle are planning to leave the village to visit an old patient. Matt touches a pair of gloves inadvertently left behind by Dr. Lyle and sees a vision of the Lyles being stopped at the edge of the village by the stones. When questioned later, however, the Lyles deny that anything happened to them, but it is obvious that they have become ""happy."" Matt and Sandra find Dai's dead body, his hand clutching the fragments of his broken amulet.

Dai tells Matt to come to his home, ""The Sanctuary,"" if he ever needs help. Adam discovers that there is an underground rock dish beneath the village with the stones at its perimeter. Matt suggests that psychic lines emanating from the stones delineate an inner circle surrounding Hendrick's manor house. Later that night, he finds the villagers forming a ring around the manor house and chanting. When he tries to get closer, Dai grabs him and throws him against a stone.

When Adam and Hendrick go to investigate Dai's death, the body is gone. Matt uses Sandra's scarf to watch psychically what happens to Margaret and Sandra when they go to Hendrick's place for dinner. Matt ""sees"" Hendrick perform a ceremony where the Smythes are transformed into ""Happy Ones.""

Speculating that the black hole is involved in the transformation process, Matt and Adam sabotage Hendrick's clocks so that he will misjudge the position of the black hole during the tranfromation ceremony. However, believing that the transformation has been successful, he sends Matt and Adam to join the other villagers. Adam touches Margaret's hand, breaking the spell over the villagers. A beam of light changes Hendrick into an ancient priest and some of the villagers into stone. Matt and Adam escape to The Sanctuary, where they spend the night. The next morning, they find Dai and the other villagers alive and well, and leave the village.

Adam Brake, an astrophysicist, and his son Matt arrive at the village of Milbury, where they plan to do research on the giant stones that encircle the village. They possess a painting depicting an ancient ritual in which a circle of people are turned to stone by a light beam shooting into the sky. They meet some of the villagers: Mrs. Crabtree, the housekeeper for the cottage where they are staying; Raphael Hendrick, the Lord of the Manor and their landlord; Margaret Smythe, the curator of the village museum; and Dai, an old poacher. At school, Matt notices that some of the students, ""The Happy Ones,"" are very good at mathematics and cannot be hurt physically; aside from Matt, there are three other students who are not ""happy""--Kevin Lyle, the son of the village doctor; Sandra Smythe, Margaret's daughter; and Jimmo Browning. In the meantime, Adam touches one of the stones and experiences psychic phenomena.

The transformed Smythes join the other villagers who have encircled the manor house, but later back at the cottage they deny that anything has happened to them. The next day, Adam decides that he and Matt are leaving the village. However, as they drive out of the village, they are stopped by the stones, just as the Lyles had been. They wake up in Hendrick's house and are prevented from leaving by the villagers who are ringing the house again for the next transformation ceremony.