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The yellow line is where it wants to create the loop cut. I'd like to have it go around the torso. I've tried another method with edge slide, but it didn't work because it made spikes to where the vertices were with a subdivision modifier.
$\begingroup$you can't create an edge loop all around the torso because it crosses some ngons and not ngons. But you could create it quickly with the knif tools (K to activate, Z to cut through and C to cut perpendicularly to the axis)$\endgroup$
remove doubles
You might have a weird mesh topo $\endgroup$