Attempt to index upvalue

I have just started learning Lua today. I have been doing the tutorials on coronalabs.com website... I tried to adapt a the first exercise with tapping the bouncing balloon into the scenes template of the asteroids games. Can someone tell me how I am "attempting to index an upvalue"?

local composer = require( "composer" )

local scene = composer.newScene()


-- -----------------------------------------------------------------------------------
-- Code outside of the scene event functions below will only be executed ONCE unless
-- the scene is removed entirely (not recycled) via "composer.removeScene()"
-- -----------------------------------------------------------------------------------

local physics = require( "physics" )
physics.start()

local tapCount = 0
local platform
local balloon
local tapText

local function pushBalloon()
     balloon:applyLinearImpulse( 0, -0.75, balloon.x, balloon.y )
     tapCount = tapCount + 1
     tapText.text = tapCount

end



-- -----------------------------------------------------------------------------------
-- Scene event functions
-- -----------------------------------------------------------------------------------

-- create()
function scene:create( event )

    local sceneGroup = self.view
    -- Code here runs when the scene is first created but has not yet appeared on screen
physics.pause()
local background = display.newImageRect( "background.png", 360, 570 )
background.x = display.contentCenterX
background.y = display.contentCenterY
local platform = display.newImageRect( "platform.png", 300, 50 )
platform.x = display.contentCenterX
platform.y = display.contentHeight-25
local balloon = display.newImageRect( "balloon.png", 112, 112 )
balloon.x = display.contentCenterX
balloon.y = display.contentCenterY
balloon.alpha = 0.8

local tapText = display.newText( tapCount, display.contentCenterX, 20, native.systemFont, 40 )
tapText:setFillColor( 0, 0, 0 )


physics.addBody( platform, "static" )
physics.addBody( balloon, "dynamic", { radius=50, bounce=0.6 } )

balloon:addEventListener( "tap", pushBalloon )

end


-- show()
function scene:show( event )

    local sceneGroup = self.view
    local phase = event.phase

    if ( phase == "will" ) then
        -- Code here runs when the scene is still off screen (but is about to come on screen)

    elseif ( phase == "did" ) then
        -- Code here runs when the scene is entirely on screen
physics.start()
    end
end


-- hide()
function scene:hide( event )

    local sceneGroup = self.view
    local phase = event.phase

    if ( phase == "will" ) then
        -- Code here runs when the scene is on screen (but is about to go off screen)

    elseif ( phase == "did" ) then
        -- Code here runs immediately after the scene goes entirely off screen
physics.pause()
    end
end


-- destroy()
function scene:destroy( event )

    local sceneGroup = self.view
    -- Code here runs prior to the removal of scene's view

end


-- -----------------------------------------------------------------------------------
-- Scene event function listeners
-- -----------------------------------------------------------------------------------
scene:addEventListener( "create", scene )
scene:addEventListener( "show", scene )
scene:addEventListener( "hide", scene )
scene:addEventListener( "destroy", scene )
-- -----------------------------------------------------------------------------------

return scene

Solution

The upvalue in question is a local variable external to the function. When you initialize balloon in scene:create(), you are declaring it local, which is limiting the scope of that balloon to the function. Outside of scene:create(), the balloon declared near the top of your file is still nil.

Remove local before balloon in scene:create() and everything should work. In other words, change

    local balloon = display.newImageRect(...

    balloon = display.newImageRect(...