Cream together butter, conf. sugar, and vanilla until fluffy.
Stir in sherry. Sift together flour and salt;
add to creamed mixture. Stir in almonds.
Flatten dough between 2 sheets of waxed paper;
roll to about 1/4" thickness.
Remove top sheet of waxed paper;
cut dough with scalloped round cookie cutter.
Place on ungreased cookie sheet. Combine egg and water;
brush lightly over tops of cookies.
Sprinkle with red and green sugar crystals.
Bake in 375F oven for 12-14 min. or till lightly browned.
Makes 3 dozen.