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can be a lot of things, worn cable, transducer going out... I would start off by lubing both cables (the short one fron transducer to speedo and the long one from transmission to transducer)
I had the same problem with the speedo bouncing on mine. It turned out to be a shot transducer after a bit of troubleshooting but i replaced both cables (long and short) while i was at it. Check the connection of the long cable at the transmission. Mine was a bit on the loose side. Its hard to get at with the crossmember in the way but its doable.
can someone please tell me what the transducer is and how to fix it. In my thread speedo cable help, mine wasn't working, but I took it loose at the tranny last night, took the plastic gear out and the gear looked fine, hooked it back up and now it works but as this thread talks about, it bounces a lot. It's usually bouncing + or - 10 mph.
First lube the cables, if that doesn't fix it. The transducer (which controls your cruise control) is next to the brake booster bolted to the inner fender. The square cable drives may have rounded out
mine did the same thing replaced transducer and cable going to trans. it still bounces up to about 10 mph then levels off. even squirted white lithium grease still does the same thing.
I used wheel bearing grease on mine. It stopped the needle bounce for me (still reads wrong, but it doesn't bounce! ) Some people use lithium grease.
I don't think it'll matter too much what kind you use, just don't grease the last 6 inches or so near the speedometer. It'll get enough goo from the rest of the cable going into the housing. this'll also keep the back of the speedo clean by not having excess grease run up the cable.