I have long suspected this but now I have seen this with my own eyes. Recently I made major changes on a site. New site titles new content and the site collapsed in ranking. Maybe its their new patent causing this, needless to say these changes were necessary for the long term and I'm sweating the short term. However here is the point of the post. As the site plumetted I noticed these changes to overall stats.
1. Bounce rate up from 48% to 75%
2. Visitor time on site down from 3.48 to 0.35
3. Spam increase and Zombie Traffic
4. Returning Visitors down by 30%
The point is the lower the serp ranking the worse the stats are regardless of the quality of the site. And this is where Panda fails I believe. Once your down the serps you naturally get abysmal results and algorithmically is impossible to tell the quality of the site.
Your opinions please...........