Lube that cable!
When the grease dries out in the casing, the tach cable faces resistance and has trouble accelerating as fast as the tach drives it so it ends up acting like a spring. It winds up, un-winds, winds, un-winds.... and that is why your tach bounces all over the place.
I need to do the same thing to mine. If I'm in first and I bring it to redline, the tach will track just fine until I shift, since the RPMs drop rapidly, the tach cable cannot adjust so it winds up and starts bouncing all over the place. Does this when I rev the motor too.
You can buy special lube - some have used other forms of lubrication - not sure what works best.
Brian