Transmission hiccups

I recently bought a 89-90 SE Galant auto, and drove around the city in it for a couple of weeks, mostly with overdrive off with no problems. I then did a 2000+ mile drive in overdrive and it didn't miss a beat. When I was driving around in the city again in "OD off" there were no probs until out of the blue it had trouble getting into 2nd and/or 3rd gear revving high while trying to find a gear. It's not as severe in OD but can still notice it, particular when cold. Transmission fluid as far as I can tell seems OK. Any ideas?

same happened to me. i had my tranny rebuilt for $1,000. about a month after that my friend and i were cruising and punched it down to the floor. we accelerated and at about 20-25 it go to shift and would rev high and then it would finally find a gear and it would drop down and chirp the tires. i took it back and the sucker is like oh well, u didnt check ur tranny fluid. im like wtf, ive only had it a month and for $1,000 there is no reason AT ALL that i should have to take this thing back to him. luckily my warrenty was nice and fresh and at least he chose to honor it. so its fine now, but he tells me if i turn my power on it will mess my tranny again. the guys just a cheat if u ask me, he doesnt know what hes talking about. errr. sorry i made u read so much

*and to answer your question, its bad. dont drive it unless you have too. get that thing to a place that works on trannys as fast as you can because it wont fix itself and will only get worse. sorry man.

probably a failed end clutch assembly. its rather common, and its also easy to fix.
doesnt even require trans removal!