Circular Polarizers work best when the sun is lower on the horizon. To get the best effect. The rule I use is to keep the sun at your shoulder, and shoot perpendicular to it. So considering the sun does the east to west thing, your best shots will be facing north or south. Of course, this depends on the season and location and time.... Then rotate the polarizer until you see the strongest effect (bluer sky, better contrast, less reflections in water). Some polarizers have a guide notch on them so you can align/rotate them more precisely to the sun but considering its not an exact science, I just position myself appropriately and rotate the filter until it looks good.
Just remember to have the sun at your shoulder, shoot early or late and you will see the polarizer in action. Its an amazing thing! Hope this helps. -Austin