Clunk noise when shifting upwards

I pulled the wheels and took a look at the brakes and they are solid with even wear and seem to have been done recently. When I had the car up and this may mean nothing as I'm not familiar with this rear end, but when rotating the axle left to right there seems to be play before the drive shaft would begin to spin. Maybe nothing but worth mentioning. I'll be back at it tomorrow and will definitely inspect the u joints a little closer.

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There's backlash (clearance) between the ring and pinion that is normal. It shouldn't be much (.006"~.010") but if it's at the top end of the scale you can easily see the play your describing. It's possible it's excessive. To know for sure you have to put a dial indicator on it and measure it.