sounds like an infected cut from shaving or maybe an ingrown hair. stop squeezing - the fluid you are getting now will be plasma that is there to try and carry antibodies to heal and fight infection. the inflammation is pretty normal - again, part of the inflammatory response. leave it be for at least 12 hours, and see after that if it is better or worse/no change - then head to the doctors

it's quite possible it was just a big pimple under your arm from sweating and stuff - the size of it NOW is related to your body sending all the lymphatic fluid to help heal it now though