Then add any cool icon of magic hat.
Add some text and apply the Distort >Wave filter. Create two lines of text.
Rotate and place the text.
Add some light using glow: Use unlike values for each line of text. Here is the blending option Color Dodge. Change the values of Spread, Size and Rang.
Group the 2 lines of texts and with one apply a mask to make the stripes disappear at their ends.
With the other group of text apply a Gaussian Blur effect, after that remove some parts to show the non-blurry text.
After that create a new layer below the text and with a regular big brush like 100px add a spot of light in white. The new layer created must be below the text; otherwise the shine will not affect the white spot.
Make some smoke again using eraser tool.
Then create a cloud using marquee with feather set to a value bigger than 20 and apply the render > clouds holding the command key (for Mac user), ctrl key (windows user).
Then create the sparks using a brush, play with the shape dynamics, scattering, and other dynamics. After that, apply an Outer Glow to create the magic effect.
At the result you will find a really simple but beautiful magical lighting effect.
Download PSD file – Magical Lightning Effect in Photoshop