w124 300d transmission issues

[ou2mame]

I have an 87 300d with just under 200k on it. The transmission has always shifted great, nice firm shifts. Never any hint of slippage. I was pulling out of a parking lot and accelerated up to speed, maybe hitting 4k RPM. I'm assuming that under normal operation, my car starts in 2nd gear to explain this now. I stopped at a light soon after pulling out of the lot. When the light turned green I hit the gas and started driving, but when it changed into third gear the engine just revs freely, but it doesn't decelerate as if it's stuck in 2nd gear. The car just coasts, and the engine revs freely when I push the gas pedal down. And when I slow down and it shifts back to 2nd, I can accelerate again. If I put the shifter in 2nd, it decelerates when I let off the gas, but in 3 or D the car will coast after moving into 3rd gear (it feels like anyways). While limping it home in 2nd gear, it did actually shift through all the gears and drove fine once in a while. So does anyone have any idea where I should look first? Fluid level looks fine, and vacuum system appears fine also. All the hoses are there, and the shut off worked when I parked it.