We propose a new mechanism of high-order harmonic generation during an interaction of a high-intensity laser pulse with underdense plasma. A tightly focused laser pulse creates a cavity in plasma pushing electrons aside and exciting the wake wave and the bow wave. At the joint of the cavity wall and the bow wave boundary, an annular spike of electron density is formed. This spike surrounds the cavity and moves together with the laser pulse. Collective motion of electrons in the spike driven by the laser field generates high-order harmonics. A strong localization of the electron spike, its robustness to oscillations imposed by the laser field and, consequently, its ability to produce high-order harmonics is explained by catastrophe theory. The proposed mechanism explains the experimental observations of high-order harmonics with the 9 TW J-KAREN laser (JAEA, Japan) and the 120 TW Astra Gemini laser (CLF RAL, UK) [A. S. Pirozhkov, et al., arXiv:1004.4514 (2010); A. S. Pirozhkov et al, AIP Proceedings, this volume]. The theory is corroborated by high-resolution two-and three-dimensional particle-in-cell simulations.