After the rumble, Dally and Ponyboy go to see Johnny at the hospital. When they arrive Johnny is dying. As they are visiting Johnny dies. Dally loses it and runs out. Ponyboy starts walking home and as he walks he tells himself that Johnny isn't dead. He tells himself that Johnny is "in the lot" or out with friend,or at his home. He keep imagining seeing Johnny at different places he used to hang out. He says his dreaming finally worked that he actually believes Johnny isn't dead. After Dally is killed and Pony collapse he is sick for several days. One of the Socs comes to visit him and says something about Johnny's death. Ponyboy says "what are you talking about? Johnny isn't dead."
Ponyboy's mind isn't ready to accept the loss yet and although he eventually accepts the truth, he does make himself believe, for awhile, that Johnny really didn't die.
In The Outsiders, Ponyboy is different from his friends. There is a gang culture in his town and rivalry between the Socs who "jump Greasers and wreck houses" and the Greasers who "hold up gas stations and have a fight once in a while" (ch 1). He is a Greaser and tries to stay out of trouble so that he can stay with his brothers and not be taken into care because both their parents died in a car accident. Ponyboy knows he is "smart... with a high IQ" but admits that "I don't use my head." Johnny Cade who "has it awful rough at home" is his best friend and Ponyboy talks about how any other person may have become "rebellious and bitter" but not Johnny, although his family situation is "killing him" (ch 2). Ponyboy and Johnny "understood each other without saying anything" (ch 3).
When Ponyboy chats to Cherry he realizes that Greasers "feel too violently" whereas Socs "don't feel anything" (ch 3) although Ponyboy would never hurt anyone and couldn't even use a "busted bottle" in a fight. He dreams of "the country" and a happily-ever-after scenario where his parents are alive and even Johnny comes to live with them. This helps him survive the harsh realities and the unfairness of life between the Socs who have everything and who beat up Greasers just because they are bored and the Greasers who have to drop-out of school just to manage.
After a fight with the Socs, Johnny and Ponyboy have to get away because Johnny has murdered a Soc who was trying to drown Ponyboy. The boys catch a train on Dally's instructions so that they can hide out and again Ponyboy dreams of his ideal place again and is poetic in his descriptions of the dawn. He keeps hoping that his reality is a dream and that he will wake up at home because reality is too harsh but Ponyboy knows he has to "quit pretending" (ch 5) and calm his "over-active imagination."
It is Ponyboy's ability to appreciate his surroundings that inspires Johhny and later, when Johnny dies, Ponyboy has to find a way to cope and it is easier to deny everything and pretend not to feel anything, just like Cherry told him she does when faced with a situation. Denying the situation allows Ponyboy to process his grief. He says in chapter 10, "This time my dreaming worked. I convinced myself..." Ponyboy is ill from concussion and when he starts to recover he tries to block out his thoughts but ultimately, he accepts his friend's death. Ponyboy had just hoped it "wouldn't hurt so much" (ch 12) but he is no longer overwhelmed.