Is it possible while dragging a mc to have a conditional statement?

What I would like to do is drag a mc and if it overlaps another mc, the dragging mc changes frame. It will only change frames when it is dropped, I would like to have it change frame while still dragging.

Code:
stop();
function dragMe(e:MouseEvent):void {
	dragObject.startDrag(true);
	//does not have any effect
	if (dragObject.hitTestObject(hitObject)) {
		dragObject.gotoAndStop(2);
	} else {
		dragObject.gotoAndStop(1);
	}
}

dragObject.addEventListener(MouseEvent.MOUSE_DOWN, dragMe);

function dropMe(e:MouseEvent):void {
	//but this works fine
	if (dragObject.hitTestObject(hitObject)) {
		dragObject.stopDrag();
		dragObject.gotoAndStop(2);
	} else {
		dragObject.stopDrag();
		dragObject.gotoAndStop(1);
	}
}
dragObject.addEventListener(MouseEvent.MOUSE_UP, dropMe);