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1. Wash and dry apples. Remove stems. Insert one wood stick into the stem end of each apple. Place apples on a buttered baking sheet. Place chopped nuts in a shallow dish; set aside.
2. In a heavy medium saucepan, heat and stir the caramels and water over medium-low heat just until caramels are melted.
3. Dip each apple into hot caramel mixture, spooning caramel evenly over apple. Allow excess caramel to drip off. Briefly set bottoms of apples in chopped nuts. Set apples on prepared baking sheet and let stand about 30 minutes or until firm.
4. In a heavy, small saucepan, heat and stir the vanilla-flavor candy coating and shortening over low heat just until mixture is melted. Holding apples over the saucepan, spoon the melted candy coating evenly over the tops of the caramel-coated apples. Return to baking sheet and let stand about 30 minutes or until firm.
5. Decorate the apples to resemble faces or monsters using desired candies and writing gel. Use writing gel or canned frosting to attach candies to dipped apples. Makes 8 medium apples.