First using the Magic Wand select the bird and perch.
Then right click on the bird, and click cut. This will cut the bird in a separate layer.
Then select the background you just cut the bird from and right click it and pick duplicate layer.
Then select paint brush from your tools menu. I usually start with a dark blue. Make some swirls on the layer that you think looks like clouds. Don't get detailed you will get this PS exercise very fast. Next click on the original background and pick another color, say white with some light blue in the mix. Then go to (Filter>Blur>Gaussian Blur) I set it at 125 and blur the background. Then go to the other copy and blur it the same way. Now mix the two until you get the right look. The top layer of the background Layer you can go to opacity, and set it to what ever you want to let the bottom Layer bleed threw. This will give you any cloud you want to render in a more natural look. I keep it simple usually.
This is not my discovery by the way. It is from the excellent on line book from Third Bird from the Sun http://www.thirdbirdfromthesun.com/
When you get to the point of total lunacy. Re-guarding birding and equipment this is a must read IMO. The wealth of information here is nothing short of amazing.