This is the beginning of the “Dodge City Scene”. In this scene Raymond and Squeaky is letting Raymond “walk on a tight rope” and “drive a stage coach”, while she is doing her breathing exercises. She is letting him do this as long as she is not interrupted.
This part of the scene is where Squeaky sees the girls walking towards her. Squeaky thought they were going to get out of their way, but they stop and Squeaky is ready to fight. Raymond just stays back and keeps quiet.
At the end Mary Louise asked Squeaky if she has signed up for the “May Day Races” . Apparently Gretchen thinks she is going to beat Squeaky in the races, but Squeaky is determined to win.