diff --git a/protected/gatk-protected/src/main/java/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/DanglingChainMergingGraph.java b/protected/gatk-protected/src/main/java/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/DanglingChainMergingGraph.java
index e59d39a97..c696c50ae 100644
--- a/protected/gatk-protected/src/main/java/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/DanglingChainMergingGraph.java
+++ b/protected/gatk-protected/src/main/java/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/DanglingChainMergingGraph.java
@@ -97,7 +97,7 @@ public abstract class DanglingChainMergingGraph extends BaseGraph<MultiDeBruijnV
     /**
      * Class to keep track of the important dangling chain merging data
      */
-    protected final class DanglingChainMergeHelper {
+    protected static final class DanglingChainMergeHelper {
         final List<MultiDeBruijnVertex> danglingPath, referencePath;
         final byte[] danglingPathString, referencePathString;
         final Cigar cigar;
@@ -222,7 +222,7 @@ public abstract class DanglingChainMergingGraph extends BaseGraph<MultiDeBruijnV
         if ( numElements == 0 || numElements > MAX_CIGAR_COMPLEXITY )
             return false;
 
-        // the last element must be an M
+        // the first element must be an M
         if ( requireFirstElementM && elements.get(0).getOperator() != CigarOperator.M )
             return false;
 
@@ -263,6 +263,12 @@ public abstract class DanglingChainMergingGraph extends BaseGraph<MultiDeBruijnV
         final boolean mustHandleLeadingDeletionCase =  firstElementIsDeletion && (elements.get(0).getLength() + matchingSuffix == lastRefIndex + 1);
         final int refIndexToMerge = lastRefIndex - matchingSuffix + 1 + (mustHandleLeadingDeletionCase ? 1 : 0);
 
+        // another edge condition occurs here: if Smith-Waterman places the whole tail into an insertion then it will try to
+        // merge back to the LCA, which results in a cycle in the graph.  So we do not want to merge in such a case.
+        if ( refIndexToMerge == 0 )
+            return 0;
+
+        // it's safe to merge now
         addEdge(danglingTailMergeResult.danglingPath.get(altIndexToMerge), danglingTailMergeResult.referencePath.get(refIndexToMerge), ((MyEdgeFactory)getEdgeFactory()).createEdge(false, 1));
 
         return 1;
diff --git a/protected/gatk-protected/src/test/java/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/DanglingChainMergingGraphUnitTest.java b/protected/gatk-protected/src/test/java/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/DanglingChainMergingGraphUnitTest.java
index f45dbd093..bab952e2a 100644
--- a/protected/gatk-protected/src/test/java/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/DanglingChainMergingGraphUnitTest.java
+++ b/protected/gatk-protected/src/test/java/org/broadinstitute/sting/gatk/walkers/haplotypecaller/readthreading/DanglingChainMergingGraphUnitTest.java
@@ -46,6 +46,8 @@
 
 package org.broadinstitute.sting.gatk.walkers.haplotypecaller.readthreading;
 
+import net.sf.samtools.Cigar;
+import net.sf.samtools.TextCigarCodec;
 import org.broadinstitute.sting.BaseTest;
 import org.broadinstitute.sting.gatk.walkers.haplotypecaller.graphs.*;
 import org.broadinstitute.sting.utils.Utils;
@@ -77,6 +79,7 @@ public class DanglingChainMergingGraphUnitTest extends BaseTest {
         tests.add(new Object[]{"AAAAA", "CA", "1M3D2M", false, 1});                    // very little data
         tests.add(new Object[]{"AAAAAAA", "CAAAAAC", "8M", true, -1});                 // ends in mismatch
         tests.add(new Object[]{"AAAAAA", "CGAAAACGAA", "1M2I4M2I2M", false, 0});       // alignment is too complex
+        tests.add(new Object[]{"AAAAA", "XXXXX", "1M5I", false, -1});                  // insertion
 
         return tests.toArray(new Object[][]{});
     }
@@ -144,7 +147,15 @@ public class DanglingChainMergingGraphUnitTest extends BaseTest {
         }
     }
 
-    @Test(enabled = true)
+    @Test
+    public void testWholeTailIsInsertion() {
+        final ReadThreadingGraph rtgraph = new ReadThreadingGraph(10);
+        final ReadThreadingGraph.DanglingChainMergeHelper result = new ReadThreadingGraph.DanglingChainMergeHelper(null, null, "AXXXXX".getBytes(), "AAAAAA".getBytes(), new TextCigarCodec().decode("5I1M"));
+        final int mergeResult = rtgraph.mergeDanglingTail(result);
+        Assert.assertEquals(mergeResult, 0);
+    }
+
+    @Test
     public void testGetBasesForPath() {
 
         final int kmerSize = 4;