Website dropping back and forth from #2 to #86 - penalty or Google Dance?

[miranon]

My 3 month old website had a stable ranking at #2 after a few weeks since it was online ( it's a very small niche with almost no competition ).
2 weeks ago it suddenly dropped to #86 for about a week. Then it came back to #2 and stood there for 2 days. Then, for like 12 hours it went down again, and then came back.
But 4 days ago, it dropped again to #80-90 and stays there.

The website has around 10 pages with unique content and around 20 relevant backlinks that i exanged with sites in my niche. The site has no adsense, only a few affiliate links with a nofollow attribute - the links point to a php page with 301 redirects, the page is excluded from Google via robots.txt.

Prior to the drop in rankings i did nothing with the site or backlinking.

A few other similar sites are in the top 10 without drops.

Has my site a penalty or is this Google Dance? I really hate this.

[dwzemens]

I sure don't know, but several of my sites are doing the same thing. All I have to do is look at the Adsense earnings for the day and know that they've been shuffled downward again. I hate it too.

[miranon]

Any other experiences? Will my website return to its previous rankings or should i begin with a new domain?

[Gibbzee]

Google has been messing around with it's algorithm recently which could have some effect but that looks just like the Google 'Dance' to me. Your site is new and so Google is still working out. In another week or two you should be back where you were.

Building a few backlinks wouldn't hurt though.

[iAmNameLess]

You know what? Just put your dancing shoes on and enjoy it. Stop checking your rankings for about a week, and just focus on adding more content, and a few more back links. I'm sure you're fine, I doubt you have any penalty, but adding more content, unique content, would be great!

[n_touch]

Just let it play its course, there are a lot of algorithm changes taking place right now, so many people are seeing their sites do this. I would give it a week or two for them to do everything they want as far as tweaking, and then start worrying about what your rankings are.