Two vertically offset thermistors for sensing a fluid such as oil and refrigerant in a compressor shell are monitored by a method that takes into account rapidly changing conditions within the shell. The system can determine the fluid's sump temperature, high/low liquid levels, and can determine whether the thermistors are sensing the fluid as a liquid, gas, or a mixture of the two, such as a foam or mist of liquid and gas. For greater accuracy, thermistor readings can be dithered and filtered to provide temperature or voltage values having more significant digits than the readings originally processed through a limited-bit A/D converter. For faster response, limited microprocessor time is conserved by sampling thermistor readings at strategic periods that enable the microprocessor to identify certain conditions and temperatures via simple delta-temperature ratios and undemanding equations rather than resorting to exponential functions or lookup tables to determine time constants.