Transmission not upshifting

The automatic transmission in my 1993 Volvo 240 wagon (142k) does not upshift properly for the first 5 to 8 minutes of operation when it is cold (below 55 F)and damp. When I start the car and begin to drive the transmission seems to be stuck in the lowest gear as the engine revs as I accelerate. Due to the high revving, I limit my speed to 25 mph, but after I drive for a few minutes, and the transmission warms up, it shift into higher gears, and seems to perform normally for the rest of my trip. What are the possible causes of this problem?

Since its a cold/warm issue, there are several things, one being hardened clutch piston seals. Over the years, the rubber clutch piston seals harden and tend to leak. When this happens, you will have delayed/ no upshifts. As the trans warms up, these seals soften to the point of sealing and allowing the shifts. You can add a can of Berrymans B-12 Chemtool to the trans. This stuff will do several things like soften the seals and keep the trans and valve body clean.

Here it is: