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Mine bounces a little too at certain speeds and I have new upper and lower speedo cables and a new vss.
The vss sits on top of the transmission behind the rear exhaust maninfold (where it bolts to y pipe) and a little to the right (passenger side) of it.
Absolutely - the vss has an electrical component that sends a digital signal to the pcm to let it know how fast you are going. if this does not work, the pcm won't recognize the speed properly and will shift stupid.
the vss also passes through it the rotating section that the speedometer cable plugs into. this rarely ever fails.
therefore, the most common symptoms of vss failure are a speedo that works normally, but the cruise doesn't work and the trans shifts at the wrong speeds.
the vss sits on top of the trans at the very right (passenger) end. its nearly impossible to see and almost that difficult to change....