A young poor Pick-pocket, Kalem, together with a friend, witnesses the town guards attempting to arrest a stranger. A mysterious carriage arrives and the stranger unleashes magic. Two others join him. They are sorcerers from the emperor's elite guard. They drop a bag, the contents spill out and Kalen, although affected by the magic, finds a a piece of parchment and a medallion. then finally overcome by the magic of the sourcerers, he passes out.

You have the beginning of an exciting story, but at the moment it is getting lost in unnecessary padding - exposition, infodumping and backstory. I have done this in the past myself - you are afraid that the reader won't understand who your characters are, what is going on and where the story is taking place so you spend most of the first chapter telling the reader about them. Yes it is necessary to acquaint your readers with the who, what, why, where and when, but do it gradually. Feed the reader the information as the story unfolds, as and when it is vital for the reader to know. Make the characters, the setting, the plot live and breathe. Don’t tell us about it. By the end of the first paragraph I was itching for something to happen. You need to get on with the story!

How to do it? First of all I think you need a stronger opening. introduce your main character(or protagonist)in the first paragraph, preferably in the opening sentece. By doing this you get your reader connected with your protagonist from the moment they start reading the story. I would begin with this paragraph slightly re-vamped -

As he passed the man, Kalen let himself brush gently against the man’s body. At the same time he brought the hand with the dagger up and slipped it into the man’s coat. With that he was past the man, earning only a half hearted glance of self-important disgust as the man hurried away.

Also, to hook your reader, your opening should, ideally, be dynamic. Start with your protagonist in action, doing something. My suggestion - Kalen brushed against a fat, rich man as he passed him in the street. In a practiced rapid movement, he brought a dagger up and slipped it inside the man’s coat and his purse strings. He earned a half-hearted glance of self-important disgust from the man as he hurried on his way. This one paragraph tells the reader things about Kalen, without you having to explain them. The reader can gather from the information given that Kalen is poor and is a practiced thief.

By this point in the chapter I felt that things were getting repetitive - He let out a heavy sigh as he slipped back out in the crowed and moved along the street, occasionally pretending to stumble into a group of workers and in the process, unburden them of their wages. Move on. The knowledge that Kalen is poor and thieves for a living, though his victims are little better off than he, you have already made clear by his actions.

The next two paragraphs are pure infodump. If the factory district, the workers and the patrol are important background to the story, then describe the relevent aspects of these thing during scenes which take place there.

Fear latched onto his chest - This is text book telling. Do try and get into the habit of not writing like that. Instead show us his emotions, in this case his fear – He stopped short. His heart thumped in chest and his breath came shallow and quick.

The Patrol was already there. At least ten of them, their shining plate mail breast plates streaked with rain. But they weren’t talking to an irate factory worker, as he had thought they would be. Instead they were stood, swords drawn, and faced down a tall man in an expensive-looking black cloak. Kalen could not see what the man looked like because his back was turned, but he was looking the Patrol and could see their faces.- it was at about this point, I think that I went, 'Yipee! more story at last!'and my interest re-awakened and I began to enjoy the exciting happenings.

In this chapter the only characters we really meet are Kalen and briefly, his friend Rael.

Kalen: Kalen is your main protagonist, the character drives the story. You have chosen to relate the story from his point of view - 3rd person. Head-hopping or point of view shifting is easy to do if you don't stick closely to your point of view character. At the moment, the reader doesn't get much feel for Kalen's character because you, the author keep intruding and telling his story for him. If you can get inside his skin and write the story purely from his perspective, you will then show his character, his development and how he is changed by his experiences as the story progresses. Your reader then will move through the story with him, knowing only what he knows, seeing only what he sees, feeling what he feels, experiencing his adventure with him, and will have a wonderful adventure.

Rael: Rael was big for his age. At fourteen he was already taller and broader in the shoulders than any of the kids two and three years older than him. He had been forced to prove it more than once, and had developed a reputation as someone that was not to be messed with. One would think that his size would be a problem for a thief and a cutpurse, but along with his natural size, Rael could move like a cat. Mostly that was due to his best friend, Kalen, who had taught him the benefits of speed, flexibility and balance; all of the skills necessary to make it in the life that the boys had made for themselves. In exchange, Rael taught Kalen how to live. This is all tell. It would improve your story enormously if you could weave this information into it, rather than presenting it in a block. Show Rael moving stealthily. Show that he is tall by having other characters looking up at him or making remarks about his size and build.

I found it hard to pinpoint the kind of period your story is set in. I am assuming that it is sort of late 18th of 19th centuryish due to presence of factories which suggest industrialization. Also, the people wear cloaks and carry swords and daggers and there is mention of a carriage, but you do not say whether is it horse-drawn or propelled by some other means. But then, you thow in some very modern idioms - factory managers based on who they knew or how much they sucked up.and “It’s okay, which, personally, I found incongruous.

Your descriptions could do with more detail - dull gray buildings - What were the buildings made of, granite or something else? Are they flat roofed or pitched roofed etc? A bit of imagery would be good too - for instance what do they resemble? Also, You mention factories, how do they imapact on the environment. Are they powered by waterwheel or coal? If they have chimneys do they pollute the air and cover everything with grime?

He had no way of knowing that this particular day was going to be special. That this was the day his mundane life would end. - Hmm. This is author intrusion. I would advise against writing this sort of thing. It throws the reader out of the story. If he had no way of knowing what was going to happen to him then don’t say so. Don’t tell your readers what is going to happen. Let your readers find out by showing what happens.

he slipped through the crowd, looking for the telltale bulge under a cloak that would signal his time to act. - I wasn't clear what you meant here with regards to signalling his time to act. Did you mean that he was looking for more purses to steal? Or was there some particular kind of bulging cloak which he looked for as a sign for him to do something special?

Compared to him though, these people were at least well off - I think that this sentence would work better re-phrased - Compared to him though, these people were well off.

As they passed it seemed that the crowd stepped aside to make way. - Here, you need to put a comma after passed.

Most of the workers on the street would probably cheer if they knew the men were robbed.- I think that here you should have put had been.

When he reached the men, he ducked his head and shoved his way between two of them with more force than he had moved through the crowd before. - Er, what men? Also the end of the sentence could do with re-wording - he ducked his head and shoved between two of them using more force than he had to get through the crowd.

time to pack up and go home. - this phrase activated my cliche detector.

Kalen realized who it was and took a moment to move his heart back to his chest from where it had climbed to in his throat. - Um, I know you mean this to be metaphorically speaking, but it does read oddly.

He grinned at Kalen. It wasn’t often that he was able to sneak up on the smaller boy.- This looks dangerously like a point of view shift. The temptation to shift is huge, I know, but resist it.

he admonished kindly. - admonished is a WIOS or word instead of said. Son't use them. I know that to keep on using said and asked are boring, but they are meant to be. It is good that they are because that makes them nearly invisible. Asked and said act simply as a guide to the reader to let them know who is speaking. WIOS jump out at the reader and push them out of the story. Also don’t use adverbs with dialogue tags. Naughty writer. Show that the speaker means kindness. you could say - he said and gave him a playful smile.

As Kalen watched the darkness swirl around the point he felt an irresistible draw toward it, as if he were a ship, caught in the inexorable currents of a whirlpool.- This is a good metaphor, although I am doubting whether it is altogether appropriate. Are you absoultely sure that whirlpools are within Kalen's experience? I ask because, hitherto there has been no mention of the sea.

a small medal medallion.- did you mean a small metal medallion?