Keywords dropping like bombs

After 2 months months of daily work, backlinking and so many other seo tactics for a single site, I began seeing progress, I had 2 out 3 keywords on page 1 making me a good amount at least for a beginner with my main keyword on page 2 daily climbing almost hitting page 1. I had a great 4 day run last week, but as of Monday, every single one dropped out of the top 100 including 2 other that I was working on occasionally to bring up to the top. After a fairly good investment in tools I have lost all my traffic. Bing and Yahoo are are getting my site 2 vistors an hour with page 1 ranks on all of the keywords. Is this a prime example of google changing things up? I feel quite discouraged and have invested more than I will now make in 6 months if I am lucky. I have other niche sites built and waiting for their run but with no money coming in anymore I can not even begin to get them ranked. Any suggestions or ideas?

In the couple of years I have been on this forum I have read countless threads like this and can sum up all the replies you are going to get real quick.

-Keep building on it until it comes out
-This is a classic google dance
-I've had this happen before and it will come back, just keep at it
-Sometimes google does this to "test" you to see if you will keep working on a site
-This is why you should always be working on multiple sites
-Don't put all your eggs in one basket
-Don't eat yellow snow

The last one is just something I live by Seriously though, you should just keep building and keep with the same link velocity (with whatever tools you have at your disposal that you already bought) and keep promoting it however you can. I like to think of it as a "rank tank" when it happens and it is google's way of giving me a little trial by fire. Usually after giving you a good scare it will come back stronger.

dichotom, lol ya thats pretty much what will happen!!

Ill pretty much say the same thing, keep doing exactly what you have been doing for those past 2 months, and your rankings will come back stronger than they were before.

You didn't give a whole lot of details as to 'all your work' and what you did.. but perhaps you are not aware of Googles recent update which coincides with your recent tanking in the SERPs.

This is one well thought out reflection on it all and what it might really be all about:

http://searchnewscentral.com/20110131124/Latest/latest-google-algorithm-change.html

You can find the original announcement about it all over matt cutts and googles blog if you want to read the PR version of it all (1 part truth, 9 parts BS).

Are you in a micro niche or highly competitive keywords?