Start with a gradient and some nice sky-like blue color.
step 2 of 8
With black and white as primary colors apply clouds under filter/render/clouds and change blending mode to screen.
step 3 of 8
Enhance it a bit with levels adjustment layer by moving black guide toward center.
step 4 of 8
Make an oval selection and fill it with gray. Transform it to look like a balloon and add with lasso tool the little triangle on the bottom.
step 5 of 8
Choose hue/saturation adjustment layer and with "colorize" selected change the balloon color. Add some depth with dodge/burning tool and a little highlight with airbrush.
step 6 of 8
You can do as many balloons as you like in any color.
step 7 of 8
Just like before, type each letter on a separate layer and rasterize type. Apply same technique like on those oval balloons.
step 8 of 8
Add PXL logo and do a little hooks on top of each little guy. I made an oval shapes with thicker brush and applied some bevel and emboss. Also with a small 5px brush and white color add strings around those hooks and attach to balloons. Also apply bevel and emboss in small amount to threads.