If you don't need to move sprite, remove IF - ENDIF above WEND.
I've applied "TOUCH OUT TM,TX,TY" to detect coordinates of stylus. While you don't touch bottom screen, TM will keep zero. And I've applied "SPHITRC(TX,TY,1,1)" to detect collision between stylus and sprite. If SPHITRC detects collision, SPHITRC will return the management number of the sprite.
LOCATE decides the location to print text string on the screen.
If you touch sprite, TOUCHING will be printed on the screen, and if you release sprite, TOUCHING will be erased (overwritten by space).
You can figure it out soon if you try removing LOCATE.
Is there any way to stretch the collision box? Like so if I tap anywhere in the square with the Z's and not just the top left corner, it will do something.