help -- overheating or busted sensor?

[93GTDIN]

an hour ago on my way to the bank I looked down at my temperature gauge as I often do, and It was at the top right below the red mark. I pulled over and saw no steam under the hood, and the engine didn't seem overly hot (i dont know if it even would if it is overheating or not). I squeezed the hose going to the thermostat housing and it was full. Radiator has water in it. I let the car cool down and I drive it home (about a mile). The car seems to run fine, and the gauge once again goes to the top. Once it gets there, it fluctuated one full notch (35 degrees) up and down in the span of about 10 seconds, probably less. It did this twice, and overall was erratic. The car heated almoast all the way up before I was out of the parkinglot at the bank (small parking lot)

So as far as I know, it was impossible for water to heat, cool, heat, and cool so quickly, especially in a motor.

My initial thought were that my thermostat was stuck closed... but now I think I might have a busted gauge. What do you guys think?

Thanks a heap
dino