Usually when a cable wears, it gets worn by getting longer in length. when the Speedo cable gets a bit long from wear, it puts pressure on the speedo's magnet wheel, which then interferes with the needle pickup, causing bounce.
Try putting a little washer that will push the speedo cable housing out a bit, in effect lengthening the housing so that the cable isn't too long. Also, there is a little copper washer in the angle drive that is often missing - if you put on in it may help the symptoms.
Finally, if you don't want to do any of this, just have a new cable made at a speedo shop that's about 1/8" shorter - that should do the trick.
Good Luck!