The sharp technical sell-off that began with worries about Greece’s solvency and yanked the Dow Jones Industrials Average down by almost 1,000 points Thursday ended almost as quickly as it arrived, but not before ETFs of all stripes were caught in the maelstrom.

Investors initially shed riskier stocks in favor of the relative stability of securities such as U.S. Treasurys, but by the end of the session, major stock indexes had retraced about two-thirds of their losses.

“It’s basically a technical sell-off, because if you look at any major index ETF, like QQQQ, or DIA or SPY, the 50-day moving averages were breached yesterday, and today the selling pressure quickly came in and we just literally gapped lower,” said Paul Weisbruch, an ETF trader with King of Prussia, Pa.-based Street One Financial.

Financial markets have been on tenterhooks since last week when S&P downgraded Greece’s sovereign debt to junk-bond status, then followed with downgrades of Portugal and Spain. Many investors were quietly establishing sell stops, and images of rioting in Greece in the wake of austerity measures the government imposed seemed to be enough to trigger the powerful wave of technical selling.

“When every major index ETF is trading below its technical levels, it generally generates stop-loss orders on a large scale, and selling just kind of feeds on itself,” Weisbruch added.

The world’s biggest ETF, the SPDR S&P 500 (NYSEArca: SPY) fell as much as 10 percent in afternoon trade, before recouping much of its declines to close almost 4 percent lower at $112.94. The PowerShares Nasdaq ETF that targets the 100 nonfinancial U.S. companies (NYSEArca: QQQQ) fell almost 14 percent before climbing back to settle 3.3 percent lower at $46.57 a share.

Bid/Ask Action

In the heat of the panic, bid/ask spreads on many ETFs that are typically no more than a penny blew out significantly, leaving market makers reluctant to offer panicked sellers too high a price, lest they be caught with securities that moments later were likely to be worth a lot less.

Specifically, Weisbruch singled out the Oil Service HOLDRS ETF (NYSEArca: OIH), which he said had a bid/ask spread of about $2 at the height of the selling, when volatility measurements spiked to levels not recorded since the autumn of 2008 as the U.S. financial crisis announced its arrival with a vengeance. He noted that OIH usually trades with a tight 1-cent spread.

The mirror image of the flight to U.S. Treasurys was dramatically visible with the ProShares UltraShort 20+ Year Treasury ETF (NYSEArca: TBT), which fell more than 2.6 percent. The security, the most widely held leveraged ETF in the world, is designed to double returns in a falling Treasury market and, when Treasurys rise as they did today, it magnifies losses by a factor of two as well.

“There’s a lot of macro pressure. Greece is on TV, you continue to see a weaker euro day after day, and a stronger dollar. And things like gold keep going higher. So there’s obviously a lot of caution on the street,” Weisbruch said.

He noted the buying that quickly entered the market at the bottom might be a positive sign—for U.S. markets, anyway. European ETF markets saw none of the reversal that occurred in the U.S., as Matt Hougan highlighted in his blog today.

“All those triggers are out of the market now, and someone steps in and makes the trade of the year,” Weisbruch said.