After you get the Sound Stone, you must go to Giant Step in Onett, but the path there is blocked.
Go outside and the sun will rise. If you go back into your house, a Photo Man will fall from the sky and take your picture.
Before you continue, you can go to Lier X. Agerate's house if you wish. He has found something interesting.
You can get a Town Map in the library. Talk to the woman at the counter to get it. The map will work in other towns as well.
When you are walking in town, open any trash cans that you find, because some of them contain items that you can use.
There is a house in western Onett that you can buy for $7500. It's a little beyond your means right now, but you can come back later in the game if you are interested.
Deal with the Sharks
If you try to go to Giant Step in northwest Onett, you discover that the Mayor has locked the door. If you try to visit the mayor, you find out that he is too busy dealing with the Sharks gang to talk to you.
The Sharks' headquarters is the Onett arcade. You can fight some Sharks outside, but you should upgrade your equipment first.
To get a new hat, go to the treehouse northwest of the library. To enter the treehouse, climb up through the trees near the dirty kid northeast of the library. In the treehouse, talk to the kid wearing a baseball cap. He will give you a Mr. Baseball cap.
Then fight dogs, birds, and snakes in northern Onett until you can afford the Cheap Bracelet at the drug store. Then fight more enemies until you can afford to buy a Tee Ball Bat. Sell your Cracked Bat.
After you have purchased that equipment, you can try to fight the Sharks outside of the arcade. You might want to reach level 5 before you battle the Sharks. Bring food with you in case you run out of PP to heal yourself.
When fighting the Sharks, defeat the Skate Punks first, because they can call other Sharks into battle.
When you have reached about level five or six, you should fight Frank, the leader of the Sharks. He is in the yard behind the arcade. If you reach level 8, you will learn your first psychic attack: PSI Rockin α. However, you can defeat Frank without it.
Fight Your Way into the Arcade
When you are ready to fight Frank, make sure that you have some food in your bag, such as Hamburgers from the burger shop, and go into the arcade. Defeat the Shark that attacks you, then talk to the Shark who is guarding the back door and say No when he asks if you will join them. He attacks, so defeat him. Afterward, you can go into the back yard and talk to Frank.
Frank has only a few types of attacks: brandish a knife, come out swinging, and say something nasty. When he brandishes a knife, it causes a lot of damage. Come out swinging is not as powerful. Saying something nasty will lower your guts stat, which makes you less likely to do critical hits (i.e. Smaaaash! attacks). Heal up if your HP is 30 or lower.
Frankystein Mark II
Frankystein Mark II will alternate between generating a burst of steam (which has no effect) and attacking. Heal up during the first turn if you need to. After that, heal if your HP is 15 or lower.