There's probably another reason for the fluctuation. Google claims that they don't penalize sites for backlinks.

fluctuations happen all the time, you may have had the initial boost because the pages were new, maybe you slowed down your backlinking activity and your page is reaching a spot of equilibrium. Just keep building links and focus on your keywords, you'll get back up in the first page eventually.

I really doubt Google de-ranked your site because you made ONE link on a blog. Just build 100 quality links in its place now.

New sites often rank on the first page for a day or two and then drop. I've noticed this with about 50% of my websites. This could be what happened.

This is common fluctuation. To be honest I am surprised you are ranking anywhere with just 10 backlinks if they are all just blog comments.

Also, keep in mind that you can't actually do any damage by backlinking to a bad page... If that was the case I would create a blog comment on that same blog and link it to all my competitors

Incorrect. backlinking from the same domain usually isn't as good as link building from multiple different domains, but they still both provide value. I definitely wouldn't go as far as saying Google doesn't like it

Just keep consistently building your backlinks from diverse sources and you will get back in the top 10.

If you have a new site Google tends to rank you high for a few days or so due to onpage factors alone. It is a good indication of you potential ranking if you keep up the link building and SEO. This is part of what's known as the Google Dance.

Wasn't caused by that comment, just keep building quality links and you'll climb back up.

I guess one thing I was hoping for an answer is why posting ONE comment on washtenawvoice.com caused 660 backlinks from this one website? Thank you everyone for your great answers.

Sounds like you're experiencing the typical drop after an initial surge. This seems to happen with most new sites. You'll start out ranking better than expected, stick for awhile, then drop.

The additional links are most likely from a comment widget that is showing the "most recent" comments on every page.

I'd say your just dancing. Give it a week or two and see where you're at...

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you dont have enough backlinks to have a steady position.... you need to continuosly build links until you get first and see that your site doesnt loose position anymore.

Keep building more HQ backlink, Believe it! My site come from page 10 to number 4 in page 1 in 6 day then back to number 12 in page 2 and now it come to number 6 in page 1.

Just keep building high quality backlink everyday and you will see the result

Thank you everyone! Great answers!!