A Nightmare on Elm Street 4: The Dream Master (1988)
...and at this point, the Nightmare series has officially gotten too old. Not to say that this is a bad movie, but it is definitely evident that the filmmakers have done as much as they can for the character of Freddy, and are fine with letting him become a joke.
Directed by Renny Harlin (Prison, Deep Blue Sea), Nightmare on Elm Street 4 is the first movie to settle into the official Nightmare pattern, set up in Nightmare on Elm Street 3. Basically stated, you get a bunch of two-dimensional teenagers together, and those with special personality traits or particular fears will meet up with Freddy Krueger (Robert Englund, who isn't given a lot to do). When they do, their identifying features will be used to kill them in their nightmares. Those who are simply one-dimensional, or can (barely) make the leap to three-dimensional, will survive.
That said, the only real attraction here are the nightmares. To this I say, blessed be the art design and makeup crews. There are some really wicked images, like Freddy's special order pizza, and the asthma attack from hell. The unfortunate bit is Freddy, who has effectively moved away from the terrifying bogeyman that made you afraid to go to sleep in the original to a wisecracking demonic jester, with a pun or witty thing to say for everything. He's certainly not the shadowy presence he once was, but that's probably because audiences were too familiar with him by 1988 (just another reason the series should have stopped at 3).
Worse than the third, better than the second, Nightmare on Elm Street 4 is recommended only for those who can't get enough of that razor-fingered madman in the red-and-green sweater, and if that's the case, then you've probably already bought New Line Cinema's Nightmare Collection (which is where I got all of my Nightmare films). Don't expect anything to blow your mind here - it's all formula.