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I've noticed linking out to sites that have been penalized will drop your site.
Now, when I exchange links I will do 2 searches, 1 with google for usually site name or a keyword that I think the other site should place well on... then 2nd search using google and allinanchor: preceding the search.
Just got a site from 15+pages back to now on 3rd page for a good kwy word by doing that research and removing 2 links I found to be penalized.
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