Anywhere along the parade route!
Seems everyone has their own favorite/traditional viewing location. For us, it is usually along the end of Main Street, close to the castle. I have also heard crowds are much lighter near the end of the route.
Keep in mind crowds begin to build early for the parade, especially along Main Street. Get there at least an hour early if that is where you want to stake out your spot.
I'm sure you will get lots of suggestions. Have fun!