I have been googling for days and come up with all kinds of problems but nothing that quite fits the problem I am having with my 96 TE altera. Currently the car runs around town with no temp issues - when I travel about 30kms away doing speeds of 80 - 100, I find that when I slow the temp begins to spike and then rapidly yo-yos between 3/4 and 1/2. When you stop the car, it doesn't appear hot but the overflow bottle seems to be simmering with little bubbles.

The background is this.....
A couple of weeks ago I noticed the temp gauge was hot so stopped driving it until the husband came home. We did a run into town (about 15 mins) and she ran real hot and we had trouble getting her home. Anyway...we found the radiator fan was not spinning and have since fixed that and away I went only to find the problem occurred again. A new radiator cap has resulted in the top hose being sucked in on the car cooling. We replaced the thermostat brand new around 6 weeks ago but someone suggested we gut it and put it back in so we did that. The radiator was flushed and new coolant added. We have noticed that there are bubbles in the radiator when you turn it on (even with the heater on) but the oil is not milky.

We will be checking in with a mechanic on Monday but thought I would check here for ideas. I am beginning to think it is a head gasket which does not fill me with confidence - again someone suggested a stop leak but I need to know it will not damage the car further....the alternative is maybe the water pump.
Thanks in advance for your thoughts.

There is your issue "A new radiator cap has resulted in the top hose being sucked in on the car cooling"

either the new cap is not allowing fluid back from the bottle or the bottle (overflow) has a blocked inlet, often gunk will build up and will allow fluid to flow into the bottle but when it goes to bring fluid back to the radiator when it cools it blocks, the top hose compresses due to vac in the colling system

Remove the overflow bottle, make sure is spotless inside and I think your issues will be fixed

Also never run the car with no thermostat

Yeah never take out the thermostat. Any engines that use a radiator bypass circuit will overheat if you take it out. The thermostat both blocks the bypass off and opens up flow to the radiator. Without it, you'll get shit coolant flow.