Line a cookie sheet with waxed paper. Melt caramels with milk in microwave on low heat for 1 /1/2 minutes, stirring every 30 seconds, or until smooth. Stir walnuts into caramel. Using about 1/3 cup of popcorn for each ball, dip 1 end of each popcorn kernel into melted caramel and adhere to another popcorn kernel. Repeat with remaining popcorn, forming 12 (2-inch) popcorn balls. Store in an airtight container at room temperature.