I like to read Yahoo Answers. My friend KR says the Reference Librarian in me is why I get so many "Best Answer" replies. Librarians are trained to hear the question behind the question.
Recently one person wrote in:HELP! My yarn keeps splitting when I am knitting! I am using size 8 needles and this is my second time knitting. My needles are bamboo.
She rated my reply as Best Answer.
You say you are using bamboo needles, so that rules out your needles being too pointed. Bamboo needles are more rounded than metal ones. Bamboo, by its nature, gives your yarn a bit more traction as it runs along the needle. It's good to use with shiny, slippery yarns. Metal needles, on the other hand, have smaller points and slippery surfaces. They let yarn that catches and drags slide more smoothly during stitch formation.
If tension isn't your problem, you might try switching to metal needles to see if the problem is being caused by the nature of your needles.
With that said, I'm guessing the problem IS tension. You say this is your second knitting project. Almost every beginner I've ever taught to knit or crochet knits tightly because s/he is so intent on learning. If the loop of the stitch is really tight around the first needle, there is no slack to let the second needle in to form a new stitch. As you fight to insert the needle, you snag the yarn and split it. You can also snag your finger and poke holes. I've known beginning knitters to look like they lost a battle with a porcupine because they keep poking themselves with the needles.
Now, the hard part is -- how do you release tension?
1. You can consciously watch how you form your stitches and stop before you feel you have pulled the stitch down completely. (Stop at 3/4 instead of completely done.) It will take two-three rows before the new slack becomes evident.
2. You can ask a more experienced knitter to knit a few rows loosely for you. When you take the fabric back, it will feel like the other knitter was real "sloppy" compared to what you have been doing. Work to repeat the "sloppy" tension and keep yours that way. (Not working tightly is hard to do! It's like not thinking about pink elephants. )
3. You can quit holding the yarn that comes from the ball -- don't hold it with either hand. Let it hang loose. Don't think about tension right now. Concentrate on forming the stitches. Some will be big and sloppy. Some will be tight, but you will learn to make the stitches. Later, when you wash your project, the swish/swish tug of washing should readjust the tension throughout the pieces so you won't see big holes. (Read the care label. Some yarns need to be hand washed.)
Later, after you have the mechanics of stitch formation under control, you can start catching that yarn in one hand and holding it to put a little drag on the stitch to make the shape more uniform. There are two methods of stitch formation and carrying the yarn. One is European, one is American. Both are good. When you are ready, use the one that appeals to you.
Most of all, trust that after you have made one or two projects, you will catch on and not have this problem any more.