heating issues

[Ripituphard]

I have a 92 xlt 4 ltr that has some heating / cooling issues. The temp gauge will run up to just past half then drop down to 1/3. it is constantly back and forth. I have changed the thermostat and replaced the coolant with a 50/50 mix. I live in Alberta and the temp has been around -10c. Would the radiator cap cause this? I don't thing i have a head gasket leak as i haven't seen any water in the oil. I have noticed some oil in my water reservoir but none in the Rad. The oil is not red so i don't think its a tranny fluid leak although the fluid is a little dirty and needs a change. I have a tranny temp gauge installed in the hot line coming into the cooler and the temp stays below 180f unless its pushed hard (hillclimbs) so i don't think i have any coolant in the tranny. Any advise would be great.
Thank you.

 

[btexpress]

If you have something to check engine temp with, see if there is a difference when the gauge is acting up.

Could be the temp sending unit for the gauge is faulty causing incorrect readings. This part is cheap, might replace it and see if it makes a difference.

Do you notice any big difference in what is coming out of the heater?