ACR ENCOUNTERS MOUNTAIN WAVE JUST PRIOR TO REACHING ASSIGNED ALT. ALT HOLD NOT PROPERLY ENGAGED. ALTDEV.

Narrative

ENRTE CLB FROM FL310 TO FL350; REACHING FL350; NOTICED VERT SPD INCREASING TO 1000 FPM AND AT FL351; STARTED PUSHING NOSE OVER. ALT CAPTURE HAD DISENGAGED; ALT HOLD WAS PUSHED; ACFT CONTINUED CLB. THROTTLES HAD GONE TO LOW LMT; ALT WAS NOW FL352. ATC ASKED OUR ALT; WE CONFIRMED THE INDICATION. AUTOPLT WAS DISENGAGED; AND ACFT WAS NOSED OVER AT FL354 AND DSNDED TO FL350 WITH NO FURTHER INCIDENT. ATC CONFIRMED NO CONFLICT. APPARENTLY WE ENCOUNTERED A MOUNTAIN WAVE JUST PRIOR TO REACHING FL350; ALTHOUGH FLT CONDITIONS HAD BEEN SMOOTH. BOTH PLTS WERE SURE ALT HAD BEEN ARMED; ALTHOUGH AT FL351; THE 'ARM' WINDOW OF THE FMA WAS BLANK. APPARENTLY THE 'ALT HOLD' BUTTON WAS NOT PUSHED FIRMLY ENOUGH; AS WE CONTINUED TO FEEL THE ACFT RISING (AS OPPOSED TO THE SENSATION OF CLBING); AND I CONTINUED TO OVERPWR THE AUTOPLT BEFORE THE DISCONNECT. THE ALT EXCURSION WAS NOTICED AT +100 FT; AND WITH THE RATE OF CLB OF ACFT IN THE RISE; WITH 142 PAX; SEAT BELT SIGN OFF; CARTS IN THE AISLE; I DECIDED A GENTLE NOSE OVER WAS PREFERABLE TO AN ABRUPT 'HARD OVER' JUST TO REMAIN AT FL350. FLT CONDITIONS WERE CLR AND VISIBILITY UNLIMITED. BY THE TIME THE ALT WARNING OCCURRED; THE ACFT WAS ALREADY BEING CORRECTED.