I was ranked #1 January 1st and the next day i dropped to #3. Now, i see my site fluctuating from not even being listed... to number #3. Is this a database issue with Google or I'm i being sand boxed?
How long has your site been around? Google's ranking results can be fluctuating during the same day. Your ranking results in the morning can be different from those in the afternoon.
If your site has been around long enough and have plenty of quality links, the fluctuation should be not very dramatic.