[84LX89GT]

More than likely it's an internal trans problem. Check the condition of the fluid, if it's burnt then probably the intermediate clutches are going out (i believe AODE has clutches and not a band off the top of my head). Something that is very common in those transmissions is the accumulator pistons wearing out, i had a 2-3 accumulator piston wear out in the '97 crown vic police car i had and it did exactly what you're describing just into 3rd gear - cost $5 to fix plus fluid. I don't remember if you have to pull the valve body to access the 1-2 accumulator or not, but that's probably where i'd look. It's hard to tell without a line pressure gauge, the AOD based trannies have lots of pressure ports that give good info. Other possibilities are sticking valve body valves, seperator plate gasket leak, intermediate clutch piston o-ring leak/burnt clutches or there could be a shift solenoid that isn't operating if it's skipping 2nd altogether.
Is the check engine or O/D light on?