W210 Sedan,rear Shock Clunck
 

I noticed a very annoying clunck coming from drivers side rear shock on a 1996 W210,it sounds like the spare is jumping in the housing on small bumps.If I press that shock down couple of times I can hear the clunk,shock seems fine,however it sounds like a internal problem,or maybe not...any input will be helpful

I would check the rubber bushings that mount the shock ( upper & lower ).
They may be deteriorated. ;)

Check the wheel is tight.

I'd also jack it up and check for any play in the wheel and suspension.

Have you checked the sway bar links?