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1. Create a new layer and paint the whole background black.
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2. Type the word, SMOKE in 'Small Fonts' font, 144 pt.
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3. Set the background layer as gradient overlay. It's under layer, layer style.
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4. Go to blur, motion blur and set the angle to 90 degrees and the pixel distance to 40.
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5. go to filter, distort and wave and set 3 for the Number of Generators, 10 and 346 for the Wavelength, and 5 and 35 for the Amplitude
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6. Gaussian blur, set it to 10 degree. and group the text and background layer.
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7. Create a new layer and put it on top of all the layers and choose the clouds effect that is under filter, render.
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8. Change the blend mode to color dodge.
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9. Go to layer, layer mask, and reveal all.
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10. Use a soft brush to cover up some parts of the clouds. Lower the brush opacity first.
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11. I downloaded the brush set from http://qbrushes.com/photoshop-abstract-brushes/smoke-brushes/ and created a new layer with the color setting to color dodge. And using the brushes I downloaded, I decorated the word to make it look like the word is smoking.
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12.Add a new layer, put it behind all the layers except the background layer, and paint the new layer black. And go to filter, texture, texturizer and set the scaling 100% and 4 for the Relief. For the Texture use Canvas and for the light, use Top. And set the opacity to 10%.
I like how the image looks at this point, but to finish the tutorial,