You should be able to set it at either one. Just make sure that when you install the distributor pointed at #1 that you are at TDC of the compression stroke on #1. To check to see if you are on the compression stroke, have someone turn the engine with a wrench while you hold your finger in the #1 spark plug hole. On the compression stroke, it will try to push out your finger.
Here is some information from Comp Cams:
Now that the lower crankshaft gear is installed rotate the crankshaft using your crankshaft socket, (Part
#4793 for Small Block Chevy or #4797 for Big Block Chevy), until the appropriate crankshaft gear
tooth is in the 12:00 position and the crankshaft gear keyway slot is in the 2:00 position. The #1 piston
should be at top dead center. Rotate the camshaft until the camshaft dowel pin is at the 3:00 position.
Loop the chain over the camshaft gear. Align the camshaft and crankshaft timing marks and loop the
chain around the crankshaft gear. Lift the camshaft gear into place on the camshaft. Install the three
camshaft bolts (finger tight for now). Make sure that the camshaft gear timing mark aligns with the
proper crankshaft gear timing mark. The camshaft timing mark should be at 6:00 and the crankshaft
gear timing mark should be at 12:00. If this procedure is missed by even one tooth, engine damage can
result.