The PNP switch often acts up when it is cold. I expect we
will see a few postings about this as the weather turns cooler.
Bay 13 has good notes on this issue:

http://volvospeed.com/bay13.htm

Note the failure mode is slow and you have time to get it fixed.
Eventually it will start to lock the car in third gear (limp home
mode) and acceleration will seem very slow. Reverse will still
work. Sometimes turning the ignition off and on once the car
warms up clears the limp home mode setting.

On our 1995 moving the gear selecter through the gears could
actually cause the light to start flashing. Eventually I
had to replace the PNP switch to fix the problem.

You can search on "PNP" below to get more posts on this.
There will be a lot of them.