Line 2 baking sheets with waxed paper; grease the paper and set aside. In a large heavy saucepan, combine the caramels and water; cook and stir over low heat until smooth. Stir in pecans and cereal until coated. Drop by teaspoonfuls onto prepared pans. Refrigerate for 10 minutes or until firm.
Meanwhile, in a microwave, melt chocolate chips and shortening; stir until smooth. Dip candy into chocolate, coating all sides; allow excess to drip off. Place on prepared pans. Refrigerate until set. Store in an airtight container.
