Open Adobe Photoshop. (I was using Adobe Photoshop CS2, and if you are using an older version, you might not be able to create this effect.)
Open or create a new image.
At this point we will split:
If you want to make clouds reflected read what will be below. Those who already know how to make such effect, or aren't interested into making one, please skip till furter notice.
Select the two colors you want the sky and clouds to be. (Doesn't matter which one is the foreground or background color.)
Select the gradient tool and draw anything.
Select Filter>Render>Clouds as shown below.
Now the tracks meet each other again and we move on.
Select Filter>Distort>Ocean Ripple as shown below.
Adjust the settings at your own free will. I used settings that are shown below.
And you are ready.
I RECOMMEND USING IT ONLY ON CLOUDS! If you want to have the water look a bit deeper in the middle of the picture do the following things.
Select Filter>Artistic>Plastic Wrap as shown below.
Adjust the settings as you wish. I used settings shown in the picture below.
Now print it and take it to a sunny place, put it near your eyes and imagine that you are near a sea
That is it for now.
If you want to post it in forums or your webpage, or anywhere else you must ask my permission!!!