To begin this tutorial, change the foreground color to C6C5C5 then grab the "Text Tool" and using "Palatino" as your typeface, at the size of 97, type "smoke."
Now go to the main menu and select "Filter" then "Distort" and lastly "Ripple." Slide the Amount bar to 85% and make sure that the size is set to "Large." Click Ok.
You should now have the following.
Next Go to "Filter" then "Blur" then "Gaussian Blur" at 1.6. Now right click on the text layer and choose "Blending Options." Then select "Satin" and use the below settings.
You should now have the following.
Next, duplicate the layer and set the "Blend Mode" to "Multiply" and the "Opacity" to 20%. Then, click on the original smoke layer and go to "Filter" then "Blur" then "Gaussian Blur" at 1.6 again.
Create a new layer and using the "Pencil Tool" draw a series of black lines as I have done below.
Now go to the main menu once again and select "Filter" then "Distort" and lastly "Ripple." Slide the Amount bar to 85% and make sure that the size is set to "Large." Click Ok. Next Go to "Filter" then "Blur" then "Gaussian Blur" at 1.4.
Now right click on the duplicated smoke layer and choose "Blending Options." Then select "Color Overlay" and use the below settings.
The Results!!!
You can also grab the "Smudge Tool" if you feel you want to do more for the smoke effect, but as far as I'm concerned, this tutorial is done. Enjoy.
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